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During the Great Depression, new deal policy makers came up with mortgage and consumer lending policies that convinced commercial banks that: consumer credit would be profitable.
It is commonly accepted that the United States' strict monetary policy, which was intended to curb stock market speculation, was the primary cause of the initial decrease in output during the summer of 1929. The collapse of the stock market significantly decreased American aggregate demand. Following the crash, both business investment and consumer purchases of durable goods declined precipitously. Real output in the United States declined quickly in late 1929 and throughout 1930 as a result of the sharp decline in consumer and business spending, which had been falling slowly up to this point. The decrease in stock prices was one of the factors contributing to reductions in production and employment in the United States, even though the Great Crash of the stock market and the Great Depression were two very different occurrences.
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