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What Caused The Great Depression

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The Great depression has many causes, but the biggest trigger for the great depression was bad monetary policy from the Federal Reserve. “The Federal Reserve System was created to prevent events such as the great depression from happening, but from 1929 to 1933 its policies did the opposite of what they were created to do (KUPELIAN).” According to Ben Bernanke, the past chairman of the Federal Reserve, the central bank helped create the Depression. The main reason he blames the central bank is that it used tight monetary policies when it should have done the opposite. According to Bernanke, “the Fed began raising the fed funds rate in the spring of 1928. It kept increasing it through a recession that began August 1929. That's what caused the stock market crash in October 1929.” This stock market crash, “Black Thursday” caused investors to turn to the currency markets, in a time when gold guaranteed the value of the US dollar, and investors began trading in their currency for gold. …show more content…

What they should have done was increase the availability of money so that so that businesses wouldn’t go bankrupt. Increasing the supply of money in the economy would have also helped to combat deflation, which is a reduction of the general level of prices in an

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Buying on credit, overproduction, and income inequality were just some of the leading factors to the great depression. It began when installment buying was introduced people didn’t view debts as shameful and bought things at a faster rate than they could pay. People were also investing a lot in the stock market one day it crashed. October 29, 1929 (now known as black tuesday) was the day the stock market crashed. It caused great panic in America since many peoples entire life savings were lost in one day.

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The immense stock crash in October 1929 was one of the many causes of the Great Depression. Banks were putting an abundant amount of money into the stock market, and could not keep up with the fast demand. The value of our currency dropped, thus leading to us losing more money, and many Americans were unemployed, plus low wages. As a way for America to make a profit, they put taxes on other country's products to protect American industries. American citizens were furious at the banks for losing their money not being able to pay them back.

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The great depression in the US, which began in 1929, and ended in 1938 was caused by many different things all happening at the same time in the economy. The wall street crash in October 1929 was one of the main causes, when the stock markets crashed. This was caused by many things, but the main reason for it was a deflation (which is an event where the general level of prices in an economy are reduced) On October 24th (black Thursday), share prices dropped by 14 billion dollars in a day, and more than 30 billion in a week. This forced many of the banks to close, due to them investing their client’s savings in the stock market.

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However, the overproduction was massive and when people were not able to afford to buy more products. As a consequence the production slackened increasing the rate of U.S. unemployment. For this reason, people were not able to afford to pay their bills and debts. The economy was not advancing because people did not have the money to end the surplus and even though the price were dropping really fast and low, people could not manage to pay their debts and buy more products at the same

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699 Words | 3 Pages

Some might be wondering, what caused the Great Depression? Well, the Great Depression arrived in 1929. American citizens were out of work and didn’t want the government's “charity”. Stock market crashes, supply and demand, and contractions are some of the causes that can be found throughout the Depression.

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The Great Depression was a complex event caused by a variety of factors. The six factors of the Run on the Banks, the Stock Market crash, the uneven distribution of wealth, problems for business and industry, problems for farmers, and the overuse of credit all played a role in the start of the Great Depression. All of these factors were an important factor in helping start the Great Depression. However, the overuse of credit was the most important factor of them all because it led to people relying on loans, too many payments for the consumer to adequately keep up with, and the economy eventually drying up once the influx of money stopped.

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Although, people could not pay these loans back, which caused banks to run out of money and eventually thousands of banks to go bankrupt. Buyers did not demand as many consumer goods after inflation, which is when money is no longer worth its value, because they were not being paid decently. People buying on credit did not have the money on them at the time of their purchases. It was easy for people to buy products and not think about having to pay the prices later. Therefore, people who did not have the money to pay for the goods they bought went into massive amounts of debt.

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551 Words | 3 Pages

Many businesses acted accordingly to the presidents wishes, some even publicly broadcasted that they were complying with Hoover's ideas. The idea was supposed to soothe problems, but it did the opposite. After deflation set in, the value of wages increased. This led to workers getting raises during a time when firms were not able to afford the increases and productiveness was starting to decrease. This ended up increasing the price of labour and

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HIV and its eventual condition, AIDs, is a epidemic that has plagued America since its first discovered in 1983 by the doctors of UCLA. Its catastrophic impact and fast spread was bolstered by many attributes. The reception and incorrect host range led to misinformation that it only affected homosexual white men. The way society acted against disapproved notions allowed HIV to thrive as people kept things to themselves. The government was ineffective and unprepared to stop the virus while religion only made it worse by labeling it as God’s wrath.

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America had experienced other depressions or “panics,” but none were like the Great Depression. The Great Depression began on October 29, 1929, Black Tuesday, with the stock market crashing. Most people believe that the cause of the Great Depression was the stock market crashing. Although that is what triggered the Great Depression there were many underlying causes that lead up to the stock market crashing. Some of the underlying causes include under-consumption/over-production, uneven distribution of wealth, loose banking and corporate regulations, tariffs policies, and the stock market.

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The last major cause of the Great Depression is the lack of support from the federal government and the Federal Reserve. Even before the Great Depression had begun, the federal government was increasing the federal fund rates and the interest rates to keep up with the stock market. Even after the stock market crash, the federal government increased the interest rates even more in an attempt to raise the value of the dollar (Amadeo 11). However, the rise in interest rates only lessened the amount of available money for businesses to work with, which sent even more businesses into bankruptcy. Alongside the value of the dollar decreasing, the federal reserves did not make more money or increase the supply of money to try and slow the deflation.

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The Great Depression was caused by speculation and installment buying, income maldistribution, and overproduction because each of these factors combined made the economy worse before and after the stock market crash, which led to The Great Depression. Speculation and installment buying helped caused The Great Depression because people were buying so much stuff on credit, when

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1867 Words | 8 Pages

When a person hears the words “The Great Depression,” almost everyone thinks of the worst economic times in the United States. The Great Depression started in the late 1920s and continued on until the early 1940s. It is known as being “the deepest and longest-lasting economic downturn in the history of the western industrialized world” (“Causes”). We can learn from the occurrences during The Great Depression that government involvement is the deciding factor of whether an economy will expand or continue to shrink during a recession. The Great Depression was a horrendous time for everyone from people with businesses to farmers even banks until The New Deal was introduced then finally things got better.

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2514 Words | 11 Pages

The Great Depression was a very bad stock market crash that happened on Black Tuesday of October 29, 1929, and happened to end just about twelve years later which was just about on December 7, 1941. The great stock market crash is known to actually be considered to really start on October 24, 1929, a few days before the crash really went downhill. It actually happens to be known as the worst stock market crash to ever happen in history and even to present day. The Great Depression was a very long, suffering, and economically bad time for the people of the United States of America. It is said that it took twenty-two years to finally recover fully from the stock market crash, which was until the year of 1954.

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780 Words | 4 Pages

In the early 1930s the labor force in countries that were industrialized saw as much as one forth of its workers unable to find work. Conditions were starting to improve by the mid 1930s, however total recovery did not happen until the end of that decade. This was a very difficult time in United States history and around the world, but it could be said that something good came out of it, central banks throughout the world now try to thwart or moderate recessions. It is unclear whether a change like this would have occurred if not for the

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