In the 20's the Fed reduced interest rates and banks were lending money to every tom dick and harry. A big boom which then went bust(Sound familiar?) Ask the current chairman of the Fed, the Last chairman of the Fed and your hero Krugman and they will all tell you that the Fed caused the Great Depression and then made it even worse when they contracted the money supply.i bet there were never recessions or depressions (see: "panics") before the federal reserve
it was the policies of the 20's, eerily similar to what the republicans are rooting for currently, which caused the great depression.
edit: there were other factors as well, but to blame it all on the fed reeks of "just-read-ayn-rand-again", as does the incessant and prepubescent scorning of "statists".
oh my, statists! the horror!
You know why they call it the "Great" depression? Cuz it was worse than any recession or depression in our history. Anytime you have fractional reserve banking you will have recessions and depressions. Fractional reserve banking is another name for the creation of debt as money. Anytime you use debt as money you have boom and bust episodes, the severity of which is dependent on the total amount of debt in the system.