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
Economist James Deusenberry argues economic imbalance was not only a result of World War I, but also of the structural changes made during the first quarter of the Twentieth Century. He also states the branches of the nation's economy became smaller, there was not much demand for housing, and the stock market crash "had a more direct impact on consumption than any previous financial panic"