Causes of the Great Depression
Second, there are the monetarists, who believe that the Great Depression started as an ordinary recession, but that significant policy mistakes by monetary authorities (especially the Federal Reserve) caused a shrinking of the money supply which greatly exacerbated the economic situation, causing a recession to descend into the Great Depression. Related to this explanation are those who point to debt deflation causing those who borrow to owe ever more in real terms.
Causes of the Great Depression
In his book "The General Theory of Employment, Interest and Money" (1936), British economist John Maynard Keynes introduced concepts that were intended to help explain the Great Depression. He argued that there are reasons why the self-correcting mechanisms that many economists claimed should work during a downturn might not work.