What role did fear play in causing and prologing the Great Depression?

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Posted on (Answer #1)

Fear played a major role in the Great Depression.  

First, the stock market crash was caused in part by fear.  When the market started to go down, many investors got scared.  As they got scared, they continued to sell in a panic and prices went down more.  This led to vicious circle with prices going down and causing more fear which sent prices lower and so on.

Once the Depression was going, fear kept it going.  Banks were afraid to lend money for fear of not getting it back.  Businesses were afraid to hire and pay people for fear that the products made would not sell. Everyone was afraid to take any of the risks that would be necessary to get the economy going again.

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