The Great Depression was a turning point in U. It has generally been established that the stock market crash in October 1929 was the beginning, and even the cause, of the Great Depression. Within a month of the crash, stocks had lost half of their value. The great tragedy had earlier beginnings and important possible causes. These potential causes include the maldistribution of purchasing power, the lack of diversification in the American economy, the credit structure of the economy, bank failures, the action of the Federal Reserve, America's position in international trade, and the international debt structure.
Economists have many different ideas and theories about what caused the Great Depression. Peter Temin argued that monetary forces were not the cause of the depression. On the other hand, he attributes the depression primarily to an unanticipated and unexplained decline in consumption expenditures. John Maynard Keynes, in the early 1930s, attributed the crisis to the impact of changes in Federal Reserve monetary policy. Later however, in his book The General Theory of Interest, Money, and Employment in 1936, he blamed the depression on the loss of business confidence that impaired investment spending. Nobel Laureat and University of Chicago emeritus economist Milton Friedman and his collaborator, Anna Schwartz, in A Monetary History of the United States, 1867 - 1960 also emphasize the role of Federal Reserve policy and the impact of specific monetary shocks to the financial system. Schwartz has emphasized nonmonetary forces as well as monetary forces in the onset of the depression. Furthermore, a large number of scholars, both at the time of the depression and more recently, have given a central role in their interpretations of the causes to international trade and finance1. .
One factor that could have caused the Great Depression was the maldistribution of purchasing power and, as a result, a weakness in consumer demand2.
