Reply #70: No [View All]

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The great depression was caused by monetary policy. In the late 1920s, the Federal Reserve System put new money into circulation in the US. The new money was threatening to increase inflation, so the Fed pulled the money back out of circulation. This brought on the 1929 crash and the resulting recession. The Federal Reserve continued to persist in this stupid policy, allowing the nation’s money supply to shrink by a large percentage during the next 4 years. President Hoover increased government spending, raised income taxes, and pressured large companies to keep prices and wages high, producing a glut of unsold products and mass unemployment.

There were recessions in the early 20s, and these were a lot shorter than the great depression. The great depression was caused by the fed and bad economic policy. If the government had not intervened, like Harding refused to intervene in the early 20s, the recession would have been short-lived. Unfortunately, they decided to get involved.

I understand your urge to blame the free market for the failures of government, however. I do.