The Vicious Cycle
The loss of confidence, failure of banks, and a decrease of spending and demand was called the vicious cycle where each factor effects the next. Due to the decrease in demand factories started producing less to avoid wasting money on over production, and because factories were not producing as much they did not need as many workers so many people lost their jobs. Many people were unemployed and had no income so they could not buy things. Stores did not have as many customers because the unemployed could not afford things, those stores went out of business. Stores went out of business so they did not order products from factories resulting in factories loosing money because they are not getting orders. To avoid losing so much money factories do not produce as much. Thus, starting the cycle over.
The loss of confidence, failure of banks, and a decrease of spending and demand was called the vicious cycle where each factor effects the next. Due to the decrease in demand factories started producing less to avoid wasting money on over production, and because factories were not producing as much they did not need as many workers so many people lost their jobs. Many people were unemployed and had no income so they could not buy things. Stores did not have as many customers because the unemployed could not afford things, those stores went out of business. Stores went out of business so they did not order products from factories resulting in factories loosing money because they are not getting orders. To avoid losing so much money factories do not produce as much. Thus, starting the cycle over.