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[[File:New York Stock Exchange 1939.jpg|thumb|New York Stock Exchange, 1939.]]

[[File:Soupkitchen.jpg|300px|left|thumb|Soup kitchen during [[FDR]] presidency]]

The '''Great Depression''' was a severe, worldwide economic downturn lasting from 1929 to the early 1940s. The primary cause was the failure of the [[Federal Reserve System|Fed]] to carry out its given role of preventing [[bank run]]s. Nearly half the nation's banks failed, as panicked depositors withdrew their life savings, reducing the [[money supply]] and retarding [[investment]].   

The '''Great Depression''' was a severe, worldwide economic downturn lasting from 1929 to the early 1940s. The primary cause was the failure of the [[Federal Reserve System|Fed]] to carry out its given role of preventing [[bank run]]s. Nearly half the nation's banks failed, as panicked depositors withdrew their life savings, reducing the [[money supply]] and retarding [[investment]].   

Then, things were made still worse by [[government intervention]], i.e., the largest-ever peacetime tax increase, an increase in [[tariff]]s, massive [[public works]] projects, [[wage and price controls]], and "increased bank-reserve requirements".<ref>[http://www.thefreemanonline.org/featured/the-great-depression-according-to-milton-friedman/# The Great Depression According to Milton Friedman]</ref>

Then, things were made still worse by [[government intervention]], i.e., the largest-ever peacetime tax increase, an increase in [[tariff]]s, massive [[public works]] projects, [[wage and price controls]], and "increased bank-reserve requirements".<ref>[http://www.thefreemanonline.org/featured/the-great-depression-according-to-milton-friedman/# The Great Depression According to Milton Friedman]</ref>

In historical terms, the "lessons" of the Great Depression have been applied to preventive measures, and in the [[Financial Crisis of 2008]], helped determine what remedies to apply.

In historical terms, the "lessons" of the Great Depression have been applied to preventive measures, and in the [[Financial Crisis of 2008]], helped determine what remedies to apply.

===Milton Friedman===

===Milton Friedman===

Friedman argues that the depression began as a normal cyclical downturn, but was made much worse when the money supply fell by a third, caused primarily by banking failures in the U.S. The Federal Reserve did not cause the depression, in Friedman's view, but failed to stop those [[bank failure]]s when it could and should have done so in 1931–33. In Friedman's view, the Federal Reserve failed to do precisely what it was created to do, prevent a contraction in the money supply (monetary deflation) and prevent so many bank failures. Economist [[Ben Bernanke]] adopted the Friedman view, and when the [[Financial Crisis of 2008]] hit, Bernanke, as Chairman of the Federal Reserve, made it a central goal to save the major banks using a trillion dollars in cash and credit from the Fed and from the $700 billion TARP program of October 2008 that Congress approved after President [[George W. Bush]] made an urgent appeal.

Friedman argues that the depression began as a normal cyclical downturn, but was made much worse when the money supply fell by a third, caused primarily by banking failures in the U.S. The Federal Reserve did not cause the depression, in Friedman's view, but failed to stop those [[bank failure]]s when it could and should have done so in 1931–33. In Friedman's view, the Federal Reserve failed to do precisely what it was created to do, prevent a contraction in the money supply (monetary deflation) and prevent so many bank failures. Economist [[Ben Bernanke]] adopted the Friedman view, and when the [[Financial Crisis of 2008]] hit, Bernanke, as Chairman of the Federal Reserve, made it a central goal to save the major banks using a trillion dollars in cash and credit from the Fed and from the $700 billion TARP program of October 2008 that Congress approved after President [[George W. Bush]] made an urgent appeal.