What was the Cause of the Great Depression?

The stock market crash of October 1929 was what you might call the initiation of the Great Depression and was due to speculative investment in stocks and commodities. Speculation in the stock market tends to inflate the index well beyond the true investment value of the stock. The stock market crash caused a rash of bank failures. Additionally, inflation pushed prices of goods well out of range of the average worker’s budget. So, although there existed an extensive supply of goods and services in the market, the demand was paltry as most could not afford the high prices. This, in turn, caused massive unemployment as commercial and industrial enterprises suffered severe losses from lagging sales and began laying off the work force.  Many other factors combined to play a part, including government inaction, a decline in international trade, and a subsequent decline in the economies of other countries.

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