The decade prior to the 1930's, the US was in the time of great economic boom known as “The Roaring Twenties”. The national income risen by 20%. However the growth was not distributed equally amongst Americans. Between 1920 and 1929, the disposable income of the population rose 9%, while the top 1% enjoyed a massive 75% increase.(global research, 2011) This disparity caused a mismatch between demand and supply, and thus there was an oversupply of goods, as the middle and lower class weren’t able to afford more, and the upper class were satisfied by spending a relatively small proportions of their income. The economy and peoples confidence in it became strongly reliant on three major things: luxury goods, credit sales and investment. At the same time the stock market was at it all time high with the prices of stock rising 40% between May 1928 and September 1929. This encouraged many people to invest their saving in the stock and motivated banks to loan money to their clients, so they could buy stocks on margin. Rampant speculation became a common practice and caused the stock prices to reach incredibly, almost illogically high prices. This stock bubble burst on October 21st 1929, when prices begun to fall rapidly, the crash was self-perpetuating since, the investors tried to get rid of their shares, putting downward pressure on the price. The giant loss of confidence soon spread all over the economy, causing drop in spending and subsequently drop in the industrial production, job losses and defaults on interest payments. To illustrate the scope of the depression, I will point out some of the numbers, by 1933 50% of the US banks failed, unemployment rate rose to unprecedented 25%, biggest drop in Dow Jones Industrial average was -89%, manufacturing went down by 23.%, prices dropped 25% , wages dropped 42% and GDP contracted from $103 to $55 billion.(Berkeley,2003) Causes Even though, there are many theories regarding the impact of particular factors on the depression, there is an academic consensus about what set of causes triggered the economic downturn. Due to the limitation of the word count, I will briefly go over the most crucial underlying causes and place them within the framework of the business cycle models. Fall in prices of farm products: After the IWW, through out the whole decade the productivity and subsequently production of American farms dramatically increased, it caused excess supply of their products and drop in their price. Many of them had to borrow money to sustain their farms. When the bankers became reluctant and wanted the repayment of the loans, it turned out that in many cases it is impossible, therefore many rural banks went bankrupt and numerous farmers had to leave their land.(University of Wisconsin, 2008) Agriculture sector equaled over 10% of total GDP in 1920.(University of Minesota, 2010) High Tariffs and War Debts: While America prospered during the 1920s, most of Europe, still reeling from the devastation of World War I, fell into economic decline. America soon became the world’s banker, and as Europe started defaulting on loans and buying less American products . In 1922 Congress enacted Smoot-Hawley Act that imposed high tariffs on imported goods, other countries retaliated and world trade declined.(University of Wisconsin, 2008) Wealth Disparity and Overproduction: Previously mentioned unequal distribution of wealth and income combined