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.
Benjamin Strong Jr.
Economic historian Charles P. Kindleberger states that Strong was one of the few U.S. policymakers interested in the troubled financial affairs of Europe in the 1920s, and that had he not died in 1928, just a year before the Great Depression, he might have been able to maintain stability in the international financial system; although economist Murray Rothbard claimed that it was Strong's manipulations that caused the Depression in the first place. Author Bill Bryson specifically recounts that Strong's insistence on cutting the Fed's discount rate a half percent in 1927, made Herbert Hoover furious, fueled the market bubble of 1928, and led to the disastrous market collapse in 1929.