Some of the most desperate tales in the Depression-era issues of Publishers Weekly are the ones only hinted at by ads and brief news items. The bookstore Brentano's and the publisher Horace Liveright filed for bankruptcy; the Everyman's Library reduced its prices from 90 cents to 70 cents a volume; and three workers at Schulte's (a rare-book store on New York's Fourth Avenue) went out on strike wearing sandwich boards accusing the store of "unfair practice" because the owner tried to cut wages. Publishers Weekly noted that this was the first pay cut in four years and that the strikers should have presented their boss "with a medal instead of a placard" advertising complaints.
Building on both the monetary hypothesis of Milton Friedman and Anna Schwartz as well as the debt deflation hypothesis of Irving Fisher, Ben Bernanke developed an alternative way in which the financial crisis affected output. He builds on Fisher's argument that dramatic declines in the price level and nominal incomes lead to increasing real debt burdens which in turn leads to debtor insolvency and consequently leads to lowered aggregate demand , a further decline in the price level then results in a debt deflationary spiral. According to Bernanke, a small decline in the price level simply reallocates wealth from debtors to creditors without doing damage to the economy. But when the deflation is severe falling asset prices along with debtor bankruptcies lead to a decline in the nominal value of assets on bank balance sheets. Banks will react by tightening their credit conditions, that in turn leads to a credit crunch which does serious harm to the economy. A credit crunch lowers investment and consumption and results in declining aggregate demand which additionally contributes to the deflationary spiral.