Two key causes of the stock market crash of 1929 were rampant speculation and over-leverage in the stock market. Many investors were buying stocks on margin, which means they borrowed money to purchase shares, leading to inflated stock prices detached from the underlying value of the companies.
The effects of the crash were profound, leading to widespread bank failures and the onset of the Great Depression, which resulted in massive unemployment and economic hardship for millions. Additionally, the crash undermined public confidence in the financial system, prompting significant reforms in regulations and practices in the years that followed.
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