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Please help me to describe a weakness in the Bank loan sector of the economy that would later contribute to the Great Depression.

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The solution provides insights on the topic of Great Depression in describing flaws and weaknesses in the banking sector in relation to lending and loans.

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Please help me to describe a weakness in the Bank loan sector of the economy that would later contribute to the Great Depression.

In the decade following World War II, the Great Depression was a devastating worldwide economic depression beginning around 1929 and lasting until the late 1930s or early 1940s. One of the reported causes of the Great Depression emphasizes structural factors like massive bank failures and their loaning policies. Policy mistakes by the Federal Reserve, for example, caused a decrease in the money supply greatly aggravating the economic situation that caused a recession to descend into the Great Depression. As well, around 1925, the world economy was still recovering from the period of inflation and demand for United States goods was weakened mainly due to decrease in the buying power on many key groups. Therefore, to sustain demand for goods from the United States, then, the United States banks began loaning to various European enterprises (Michael, 1992). As well, banks ...

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