Who is responsible for the Great Depression - Essay Example

(Heinrichs, 2012) Whether this was unprecedented or not, it is undeniable that great depression affected the world. It never practiced discretion; it affected both individual and companies. This paper holds that there are a number of factors that were responsible for the recession that affected the globe. This paper refutes the notion that has been put by other economists that President Hebert Hoover was responsible for the economic recession and its impacts. The economic crisis of 1930 is attributed to a myriad of intertwined complex factors.

One of the common factors that is that there was over speculation in the stock market that was not regulated by the responsible authorities. The American stock market fell in 1929 and is often regarded as one of the great reasons of depression. The crash was preceded with period when the people of America discovered the stock market. The crash resulted into a serious loss of the individual and companies investments. Investors were left shaken given that the stock market brought a lot of excitement that drove most people to put their money into the economy.

People were completed shattered when the banks erased the savings by the people including those who had not injected in the stock market. Despite the fact that recession was unavoidable, better policies and regulations could have been applied to avoid the failure by the banks. (Canterbery, 2011) The fed in 1929 took what economists regard as unprecedented move by cutting the supply of money by almost a third. The reaction literally chokes off any possibility of recovery. A myriad of banks in the country therefore suffered the problem of liquidity.

The reaction of failing to bail out banks was regarded as harsh and did not help in addressing recession in the country. The similar effect was faced by the market in 1907 when the panic of selling sent the