Deflation during the Great Depression
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The 1930 bank failures led to credit freezing up
A frozen credit system meant that there was less money in circulation, This led to deflation.
Without money in circulation, prices of goods drop and big businesses layoff workers
NO JOB = NO MONEY
people aren't able to purchase goods, so prices drop even further and inventory builds up.
Help us banks!
Banks weren't lending money, so business couldn't meet payroll. Businesses went bankrupt which meant more people unemployed
More people unemployed meant even more money not in circulation which means no one could afford to buy the goods and services to keep business afloat.
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