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When the stock market crashed in 1987, why didn't another depression occur?
What was the difference between the stock market crash of 1929 and the one in 1987 that caused a depression?
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The crash of 1929 was one of a series of events that led to the Great Depression. First, a lot of people had bought on margin, meaning that they lost much more than they had initially invested. Second, people spent less after the crash and were afraid to borrow money, which caused layoffs in industry. Third (unrelated to the crash, but part of the cause of the Depression), there was also a severe drought in 1930. Fourth, when the banks failed, the deposits were not insured, which wiped out a lot of people.
The crash of 1987 did not have the severe ramifications of the crash of 1929; so another depression did not result.
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