Economics during the Great Depression?

Question

During the Great Depression business people were very pessimistic about investing, even when interest rates fell. Did this make monetary policy more or less effective? How did this affect the Great Depression?

Answer 1

Check the link and scroll down to the Great Depression.

Answer 2

I think it's provided resistance against low investments - this monetary policy motivated investment thus providing support to economy (though affecting price level). So monetary policy protected from falling even deeper.

Sorry, I don't know your Great Depression case.

Answer 3

You are overlooking a major factor in the Great Depression. It didn't matter if interest rates were 0.00% percent. Nobody was loaning money because nobody could pay it back because they didn't have jobs..

It was a never ending cycle that couldn't be broken until the US Govt spent money in the New Deal to put people to work. It didn't matter if they paid John to dig a hole and Joe to fill it back in. Its just the fact that money began flowing back into the economy which then unsiezed credit markets. Banks began loaning money again because people had jobs. And so the cycle began moving upward. Then came WWII for an economic shot that boosted us right into the roaring 50s.