A Reconsideration of the Great Depression

The recent global financial and economic crisis has put the 1929-33 Great Depression back into the limelight. Looking at the Depression and today’s domestic and international arrangements, some have opined that another recession as severe as the Depression is around the corner. Against this backdrop, this paper revisits the events leading to the Depression and discusses the most prominent arguments on the causes, including the Friedman-Schwartz hypothesis, the bank failures in 1920s, and the slump in the US consumption. The paper continues with a reconciliation of the theories, and finally, ends with an assessment of the possibility of a return of the Depression based on today’s considerations. The authors assert that unless there is another disaster of catastrophic proportions, the world will likely be free of such an awful Depression in the 21^st century.