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What caused and ended the Great Depression?

What caused of the Great Depression. What programs, initiated by the Roosevelt administration, were designed to put Americans back to work and end the Great Depression? What programs, if any, that were successful in ending the Great Depression. It is clear that at some point the Great Depression did end; document when it ended and describe the reasons why the Great Depression ended.

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The causes of the Great Depression are controversial. Many hold that underinvestment was the main cause. This was preceded by a general loss of confidence in the banking system.

Others hold that credit remained expensive, and hence, reinvestment was made more difficult. As credit contracted, there was a run on the banks (remember, this is before bank insurance). The basic concept is that interest rates did NOT fall as consumption went down. Hence, capital remained expensive while consumption slowed.

Note too that the stock market crash of 1929 was a cause (not the result) of the Depression. This is what destroyed confidence in the system. Banks were unregulated, and were putting out risky loans in the good times of the mid 1920s to invest in the market. A bubble of overvalued (and over invested) stocks was created. Stock prices, in other words, did not reflect their production, only the desire of investors to make a quick buck in the market.

One important cause was capitalist profits. The fact is that in the 1920s, American firms were expanding. They were doing well, but they were also taking out huge loans to expand. This led to a bubble, or ...

Solution Summary

The expert determines what caused and ended the Great Depression.