They say that because the money supply fell so much an ordinary recession turned into a major deflationary depression.
The Austrian school of Economists such as Hayek and Ludwig Von Mises place much of the blame on an unsustainable credit boom in the 1920s.
The Great Depression was a period of unprecedented decline in economic activity.
It is generally agreed to have occurred between 19.
In a desperate bid to raise money, they also tried to call in their loans before people had time to repay them.
As banks went bankrupt, it only increased the demand for other savers to withdraw money from banks.
Therefore, there was a strong link between the US economy and the rest of the world.
The US downturn soon spread to the rest of the world as America called in loans, Europe couldn't afford to pay back.
Output fell, unemployment rose causing a negative multiplier effect.
In the 1930s, the unemployment received little relief beyond the soup kitchen.