Actions of the Federal Reserve System During the ‘Great Contraction’

Between 1929 and 1933 it was the recession of the most serious economic situation in the history of the modern world. During this period the output rate dropped sharply. This is known as "large contraction" and "dark year". In these years, life in the US is of course pessimistic. The decline in the price level and the surprisingly high unemployment rate are unbelievable. The actual income between 1929 and 1930, between 1930 and 1931, between 1931 and 1932, and between 1932 and 1933 was 11%, 9% in four years, respectively, , 18% and 3%, respectively. %

Fiscalists including Milton Friedman and the current Federal Reserve Chair Ben Bernanke believe that the Great Depression was mainly caused by monetary tightening, a weak policy of the US Federal Reserve System, and a continuing crisis of the banking system. In this view, the Federal Reserve Board measures that M2 shrinks the money supply by a third between 1929 and 1933 by not acting, thereby reducing the normal economic downturn It changed into the Great Depression. Friedman believes that the economic downturn will be a mere recession as the stock market crash. However, the Federal Bank allowed local banks to panic and allow extensive conflicts to arise due to the collapse of some large public banks, particularly the New York Bank of America. The explanation is that the Fed has failed to take action, especially New York branch.

The Federal Reserve (also known as the Federal Reserve or the Federal Reserve System) is the central banking system in the United States. It was created on 23rd December 1913. In a series of financial panic (especially the panic in 1907), it was hoped that the central government will control the currency system to alleviate the financial crisis and establish the "Federal Reserve Act". Over the years, events such as the Great Depression of the 1930s and the Great Depression of the 2000s have led to the expansion of the Federal Reserve's role and responsibilities.

Federal Reserve and Monetary Policy Amir Jahangir Federal Reserve System and Monetary Policy Introduction The Federal Reserve System, also known as the Federal Reserve System or the Federal Reserve System, is the central banking system in the United States. The Federal Reserve Board was founded in 1913 after the adoption of the Federal Reserve Act. The US Congress set three macroeconomic goals for the Fed. Inflation is a general rise in the prices of all goods and services. Inflation occurs when the average price level of the economy rises over time. Even if the overall price rises, the specific relative price will change. The Fed attempts to control and reduce inflation