It may not give you why, but sure will give the facts as to what caused the depression Great paper!
To my amazement the Great Depression serves as a natural debating point that 'justifies'
or 'refutes' various economic policies. The Great Depression and the New Deal are
complex topics that are open to many interpretations. The Great Depression was the
worst economic slump ever in U.S. history, and one which spread to virtually all of the
Seeing the order in which events actually occurred dispels many myths about the
Great Depression. One of the greatest of these myths is that government intervention was
responsible for its onset. Truly massive intervention began only under the presidency of
Franklin Roosevelt in 1933, who was sworn in after the worst had already hit. Although
his New Deal did not cure it, all the leading economic indicators improved during his
To understand the Great Depression, it is important to know the theories of John
Maynard Keynes. Keynes is known as the 'father of modern economics' because he was
the first to accurately describe some of the causes and cures for recessions and
In a normal economy, Keynes said, there is a circular flow of money. My
spending becomes part of your earnings, and your spending becomes part of my earnings.
For various reasons, however, this circular flow can falter. People start hoarding money
when times become tough; but times become tougher when everyone starts hoarding
money. This breakdown results in a recession.
To get the circular flow of money started again, Keynes suggested that the central
bank, the Federal Reserve System, should expand the money supply. This would put
more money in people's hands (through the multiplier effect), inspire consumer
confidence, and compel them to start spending...