What started the Great Depression 2024?

I'm a historical scholar with a keen interest in economic history, and I'm here to provide an in-depth analysis of the Great Depression, one of the most significant economic events of the 20th century.

The Great Depression, which spanned from 1929 to 1939, was indeed the most severe and prolonged economic downturn in the history of the industrialized world. It had far-reaching effects, not only in the United States but also in Europe and other parts of the globe. The causes of the Great Depression are complex and multifaceted, and historians and economists have debated them for decades.

The Stock Market Crash of 1929: The immediate trigger for the Great Depression was the stock market crash on October 24, 1929, known as Black Thursday, followed by Black Tuesday on October 29. This crash saw the Dow Jones Industrial Average plummet, erasing billions of dollars of paper profits and leading to a widespread loss of confidence in the economy.

Speculative Bubble: Prior to the crash, there was a significant speculative bubble in the stock market. Investors, driven by the belief that stock prices would continue to rise, bought stocks on margin, which is buying with borrowed money. This practice amplified the impact of the crash when the bubble burst.

Economic Policies: The economic policies of the time, including the Federal Reserve's actions, contributed to the severity of the Depression. The Fed initially raised interest rates in the late 1920s to curb speculative activity, which may have contributed to the economic downturn. After the crash, the Fed did not act swiftly enough to inject liquidity into the economy, which could have mitigated the effects.

Banking System Failures: The banking system was another critical factor. Many banks failed during the early years of the Depression, leading to a loss of public confidence and a contraction in the money supply. The lack of a federal deposit insurance system meant that when banks failed, depositors lost their savings, which further reduced spending and investment.

**International Trade and Smoot-Hawley Tariff Act**: The Depression was also exacerbated by a collapse in international trade. The Smoot-Hawley Tariff Act of 1930 raised U.S. tariffs on many imported goods, which led to retaliatory tariffs from other countries and a significant reduction in global trade.

Agricultural Overproduction: In the agricultural sector, overproduction had led to falling prices even before the Depression. The mechanization of farming had increased efficiency but also led to surpluses that drove prices down, hurting farmers and rural economies.

Structural Issues: There were also underlying structural issues in the economy, such as income inequality and a lack of diversification in the U.S. economy, which made it more vulnerable to shocks.

The combination of these factors created a perfect storm that led to the Great Depression. It was not a single event but a confluence of circumstances that, when taken together, resulted in a devastating economic crisis.

The Great Depression (1929-39) was the deepest and longest-lasting economic downturn in the history of the Western industrialized world. In the United States, the Great Depression began soon after the stock market crash of October 1929, which sent Wall Street into a panic and wiped out millions of investors.