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Banks loan your money out and then collect a profit from it. During the Great Depression people couldn't pay their loans back, which caused the bank's money supply to drop. Then when someone wanted to take their money out of the bank, it wasn't there. The news would spread and cause a panic. Panics are when everyone runs to their banks to take out their money. These runs on the bank cause it to go bankrupt and fail.

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14y ago

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