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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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