Question

What two problems did the Reserve cause by not increasing the rates in the 1920s?​

Answer 1

The problems that the Federal Reserve cause was the creation of an artificial credit boom that led banks to approve loans to low-quality or low-rated creditors, because credit was very cheap, and money supply was abundant.

This expansion of easy credit caused an asset price bubble that bursted out in the Wall Street Crash of 1929, and the subsequent years during an economic event known as the Great Depression.