What causes an economic depression? This question has been a difficult one to answer for both historians and economists.
There has been no definite conclusion amongst all of the economic viewpoints.
There are various explanations coming from all of the different groups, but no one has been able to determine conclusively why depressions occur.
The reason for most of the arguing over this important historic event is that there has been only one depression that matches the size and scale of what one would call an economic depression.
That event was the Great Depression of the 1930's.
What caused the Great Depression? There has been no formative answer in society.
Which is odd, considering the size and scale of the event and how it has effected so many people's lives.
There are however explanations held by several groups on this issue.
Business cycles are thought to go through periods of growth and recession.
Recessions often occur when to much product has been produced for the public consumption.
This is what happens when demand drops, goods for prices fall, and businesses fail to sell as much product as they had used to.
This is what is called a an imbalance between supply and demand.
This imbalance occurs frequently within the economy of a free-market society.
Recessions are thought to be short and not very sever.
Unfortunately, what actually causes a recession is also subject to much debate.
So we will not go into these issues here.
What we will focus on are the different viewpoints of the causes of the Great depression.
Which is actually, a large recession that lasts a very long time, and which recovery is very difficult.