What was the main factor that led to rising unemployment and rising inflation in the years immediately after World War I ended in the U.S.?
Some of the factors that contributed busted to downturn include:
1) returning troops which created a surge in labor supply increasing unemployment and depressing wages
2) a decline in price of agricultural commodity Europe has recovered and was productive again as producer
3) agressive monetary policy to fight inflation and severe austere fiscal policy. For example The monetary squeeze was severe: thanks to falling prices, real interest rates exceeded 15%. Fiscal policy was equally austere. For example Warren Harding, elected president in 1920, wanted the budget balanced, and vetoed a veterans’ bonus because it would add to the national debt and “undermine…confidence” in America’s credit.
4) depressed investment caused by fear of deflation