I just read on Wikipedia about the Great Depression. It's a fantastic article. Makes it very clear the reasons why the depression happened and how we got out of it.

Click to read Wikipedia article on Great Depression

Most of the things that caused the depression have also been happening in recent years! To put it in a nutshell, the expansion of money and easy credit caused a temporary boom in the 20's because people had money to buy stuff. The boom continued until people started getting scared that all this credit couldn't be paid back. Then the panic started, which resulted in a severe and rapid contraction of money and credit from the economy. When that happens it starts a vicious cycle of less spending for products causing more unemployment, which in turn causes less demand for products, and on and on. This resulted in over 25% unemployment. Another thing that reduced availability of money was the fact that the rich people got most of the money and they saved it, thus leaving the rest of the people with a lack of money to spend to keep the economy going.

The way we got out of the depression was to tax the upper class more and spend it on the working class, thus giving them money to spend to revive the economy.

So I guess that the people who say that we need credit to be available are right. We need to keep the money supply and credit flowing in order to keep the economy going. It enables businesses and individuals to keep spending money, thus keeping everyone employed.

The national debt is another form of easy credit spending which produces a temporary economic stimulus. It is many trillions of dollars now. It is another big bubble waiting to burst. When the debt grows so big that the U.S. government can't keep up with the payments on it anymore, I think that will be the mother of all busts and will dwarf the great depression, or something like that. This is supposed to happen by sometime between the years 2030 to 2040.