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What Caused The Great Depression

664 Words3 Pages

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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