During and after the first world war, the FED inflated the money supply. Almost the entire economy was geared towards war. With its demise and rising prices, the economy needed a readjustment, so the Fed raised the discount rate and the economy slowed.
In 1920 unemployment jumped from 4% to 12% and GDP fell by 17%. Instead of fiscal stimulus policies as you see today, the government has cut its budget in half, from $6.3 billion to $3.3 billion, in addition to lowering the income tax for all groups and the national debt was reduced by 33%. In the same vein, the Fed did not expand its money supply. In 1922, unemployment was already 6.7% and in 1923, 2.4%.
It is important to show that at the same time Japan was also going through a recession but did exactly the opposite of the USA, keeping prices high, preventing economic readjustments and leading to the crisis until 1927 where there was a major banking crisis.
The best president of the 20th century
With a depression in his hands, Warren G. Harding did the unthinkable, did not meddle in the economy and the Fed did not expand its money supply.
Results:
GDP
1919 - 146 bi
1920 - 140 bi
1921 - 127,8 bi
1922 - 148 bi
1923 - 165,9 bi
This gives us a clear view that the market alone can solve the problems and when the Government and Central Banks take action to solve the problems, they end up getting worse and creating even more problems, as we see today.