> he explains how the Great Depression was triggered by the fed failing to lend liquidity to a legitimate commercial bank that needed it.

Look, I am not an not expert on monetary policy. And I do believe Milton Friedman was a brilliant economist. But this specific American view that he popularized -- the Great Depression was caused by a failure of the Federal Reserve to monetize its way out of a recession -- was and is being challenged. Milton Friedman had a very narrow focus on technical monetary policy and therefore missed out on quite a many pieces in the puzzle.

After the First World War governments world wide were sitting on a pile of debt. Many were tempted by an easy fix i.e. expanding the monetary base, lowering interest rates and, hence, cheaply repay their debts. Inflation was rampant in the 1920s. As I am German, I'd like to add that it was the newly German republic (burdened with tremendous reparations) that destroyed its national currency in 1923 and, hence, triggered political turmoil eventually leading to the rise of fascism.

In the US inflation at first triggered an economic boom with cheap credits and ever rising stock prices. But early in 1929 consumer prices also have been rising sharply and the Federal Reserve reacted, correctly, by off-selling securities (especially government securities ...) and raising the Federal fund rate. But because the FED acted too late this caused a credit crunch. Stock markets being fuelled by credits crashed culminating in the Black Thursday.

While a bear market sets the stage for a recession (correcting all malinvestments in the past boom) it does not necessarily mean the onset of a year-long depression. This happened because of ill-advised economic policies by the Hoover administration.

The government started a massive deficit spending program trying to support wages by issuing public work programs and subsidising farming products. In 1930 the "Smoot-Hawley Tariff Act" cut off the American economy from foreign trade by a steep rise of import tariffs in an attempt to keep prices high as they were falling due farming subsidies. Foreign countries retaliated with increasing tariffs and American exports collapsed. As a result millions of farmers and businessmen went bankrupt since they could not sell their products abroad any more and prices fell even further. Since rising government debts were not monetized away any more by the FED, the government had to increase many taxes to unprecedented levels striking another blow at the economy. When FDR gained power in 1933 he essentially continued Hoovers policies and extended the 1929 recession into a decade of deep depression.

So what it is that we can learn from history?

According to Milton Friedman the FED should just have continued its inflationary policies to avoid the recession -- but to what ends? One could also conclude it should have simply started to counter inflation much earlier. But more importantly, the Federal government should not have restricted the economic freedom of its people in a phase where the economy tried to recover from a over-inflated boom phase caused by the FED itself.

This view on the Great Depression is of course strongly influence by Austrian economics: https://mises.org/library/great-depression.

I am not implying that this is the only correct interpretation of history. But HN readers might be interested in a completely alternative view of the events that led to the infliction of this great American trauma.