The Role of Bank Failures & Panics: The Great Depression
Economic Episodes in American History: The Great Depression, Part 6
In this video on the Great Depression, expert David Wheelock of the St. Louis Fed explains the relationship between bank failures and the collapse of the money supply. He also describes how a declining money supply influences employment, inflation/deflation and economic output. "That is the monetary explanation for the Great Depression. Bank failures, bank runs cause a contraction of the money supply; causes a decline in spending, investing and GDP."
Part 6: The Role of Bank Failures and Panics (11:33)