Austrian Cycle Theory: What Caused (& Partially Fixed) the Great Depression?
In 1929, the crash of the United States stock market kicked off a decade-long, worldwide economic disaster that would come to be known as the Great Depression. Following shortly after the crushing disaster that was World War I, the Great Depression directly led to the failure of major banks across the country, caused a record high 1932 unemployment rate of 23% in the United States, and while “unemployment spiraled up, production [went] down,” further exacerbating the economic problems.[1] This research uses primary and secondary sources to explore how the Austrian school theory of the business cycle (hereafter referred to as “The Austrian Cycle Theory” or “A.T.C.”) helps explain the cause and ultimate demise of the Great Depression. Research Methodology This research uses primary and secondary sources including an executive order, employment and money supply statistics, and secondary academic sources which provide context, perspective, and analysis. These resources are acces...