Teacher (a Short Novel Under Construction)
Copyright© 2015 by Bill Offutt
Chapter 21
"OK, Mike, let's start with you today. What's a Depression?"
"Bad time for almost everybody, lots of unemployment, economic trouble, low prices and wages."
"OK, good, those are some of the symptoms of both a recession and a depression. But what is it, George, what makes the difference?"
He shook his head.
"OK, what's your book say? Look it up."
"It's long-term," a girl said. "It's a recession if it only lasts a couple of months but depressions go on for years."
'That's good, you're right." He wrote 'long term' on the board. "What else? You find it, George?"
He nodded. "It says downturn and it says something about a business cycle. What's that?"
"It was in your reading, wasn't it? Back to you Mike."
"Uh huh, the book says things, economic things, prices and wages, go up and down, like, I don't know, roller coasters, lots of hills and valleys."
He drew an up and down line on the board ending with a big hill and a very deep decline to the railing of the board. "OK, this is not very accurate or detailed. But I remember there was a break in 1893, a bad one, and several before that caused mostly by railroad speculation and, wait a minute. Ann, what's speculation?" He wrote that word on the board.
"Uh, to speculate means to guess, to think about something. That word was on the SAT test."
"You think right, that's good. Speculation is guessing. What's economic speculation?"
"Guessing that the price of something or the value of something will go up," she paused and blinked, "or, I guess, go down."
"Very good. Suppose you think General Motors makes good cars and that their business is sure to grow, that they'll make and sell more cars and make more profits, lots of Chevrolets and Pontiacs. Do you buy a bunch of cars and hope the price of cars will go up? Ralph, how about that?"
"No, you buy stock in the company, GM stock."
"Right, you speculate, OK?"
The student nodded.
A boy raised his hand. "There's nothing wrong with that, is there?"
"Nope, absolutely nothing, if it's done fairly. There are ways to cheat. There's something called insider trading. That's how we work, our economic system. It's called capitalism. But suppose a lot of people think like Ralph, think the value and price of GM stock will go up. And a whole bunch of people try to buy the stock, pretty much at the same time. There's only so much stock, you know. What happens to the price?"
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