Causes of the Great Depression?

misdistribution of purchasing power
lack of diversification
credit structure
the breakdown of international trade
the Wall Street Crash of 1929



Can someone please include an explanation of these 5

Answer:
There are two basic theories. John Kenneth Galbraith's explanation is that the stock market crash of 1929 caused the rich to stop spending. Because of the very unequal distribution of income, this sent the economy into a depression.

Milton Friedman says that it was caused by bad decisions and incompetence of the Federal Reserve. The stock market crash might have a caused a mild recession, but the Fed turned it into a decade long depression. The Fed was supposed to act as a lender of last resort and stabalize the banking system. Instead the Fed allowed the money supply to contract sharply when people started taking their money out of the banks. As a result, thousands of banks failed and the economy went into a tailspin. When the economy began to recover in 1938, the Fed bungled it again and sent the economy back down.

Only the big increases in government spending in anticipation of the Second World War finally brought about full employement.

Incidentally, other countries tried to shield themselves (unsuccessfully) from the downturn in the US by imposing tariffs on imports. This was supposed to protect domestic producers and thus help to maintain employment. Instead it led to multiple rounds of tariff increases until international trade practically ceased.
In 1913 the federal reserve banking system was formed.
In 1918 the U. S. entered WW1. To finance the war effort the Fed printed excess dollars. After the war a lot of these dollars were invested in stocks. The dollar was supposed to be backed by Gold, in those days.

When investors realized that all the dollars in circulation couldn't possibly be backed by Gold, they panic ed and sold investments off so fast it crashed the stock market.

Everybody drew their savings out of banks at once and the banks didn't have enough cash on hand to pay them and some banks failed.

Then Roosevelt confiscated all the peoples Gold, which simply made the problem worse. Nobody had any money because the FED was now trying to shrink the money supply.

I think that should answer your question.
Cause of the great depression starts from the 1st World war. In this the countries which won or lost, suffered heavy losses. This was due to the WW1. Due to this the purchasing power of the countries has naturally gone down. And due to WW1, masses suffered from acute problem of unemployment, this means that the purchasing power of the people also decreased. Thus the people were not able to buy goods and even countries were not able to. Thus the industires in USA were under problem. Stopping of their production or decreasing the price were the only options left. But due to the tendency of avoiding the losses, the industrialist countinoued the production. But as the costs were above the peoples purchasing power, they were produced and not sold. Thus some of the industries were shut down. This resulted in mass unemployment. Thus the people tried to sell out all their shares and due to this, about millions of shares were sold, leading to the Wall Street Crash. The most bad thing was that when millions of people were suffering due to hunger, all the food grains, which were at high prices, were drowned, instead of selling them at low costs.
too much stubborn people.

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