I try to learn more in depth about topics that interest me. I was reading about the Great Depression, but it is so hard to understand for me what exactly cause it, as I read it, it feels like a mix of fancy words that don’t tell me much (likely due to my lack of knowledge and english not being my 1st language). So, could anyone explain me in simple words what exactly cause the Great Depression?
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Just about every country was on the gold standard which tied the value of currency to the price of gold. France and the United States were hoarding gold in preparation for WW2 . This caused deflation up to 33%. As prices fell businesses could either piss off their entire work force by reducing wages or lay off a bunch of people.
Mass unemployment reduced demand further causing deflation. Branch baking laws meant that the banks were vulnerable to local downturns. Bank failures reduced loans, further exacerbating deflation.
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