Reply To: Follow up question on WWII ending the GD


What made the Great Depression great was that regime uncertainty suppressed investment so that not only did the mal-investments not get liquidated but the capital stock was consumed overall from lack of investing.

During WW2, government policies consumed even more of the capital stock as the capital structure was re-oriented toward war production. What led to the post-war boom was the reasonable expectation on the part of capitalists and entrepreneurs that the regime would be moving toward freer markets.

During the bust after the post-WW1 boom, the Harding administration moved toward freer markets and the liquidation and reconfiguration of the mal-invested portions of the capital structure was over rather quickly.