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Why do Stock Markets Crash?

When markets crash, the general consensus is that the economic bubble has burst. Actually markets crashes are due to the effects of supply and demand. Basically, due to inflation, prices of goods and stocks had increased to a value that was not attractive. That is the goods were becoming more and more unattractive to the consumer. Unfortunately there will be cases where, due to the price increases, the suplly of goods increase as more suppliers entered the market. There is an excess of supply but demand shrinks and hence markets crash. Graphically this is shown below and the example used was the property sector in Malaysia. There are other related reasons but we shall examine them when I cover the theory of Money and Distribution of Wealth models.