The Federal Reserve’s Response to the Great Crisis

Lloyd B. Thomas

Chapter Chapter 9 in The Financial Crisis and Federal Reserve Policy, 2011, pp 151-174 from Palgrave Macmillan

Abstract: Abstract Federal Reserve policy in the Great Depression of the early 1930s was analyzed in chapter 8 and was found to be very poorly conceived and conducted. Serious errors committed by the Fed include permitting bank reserves to decline significantly during banking panics, sharply raising interest rates in 1931 after Britain abandoned the gold standard, sterilizing gold inflows that would otherwise have expanded bank reserves and the monetary base, abruptly reversing course in mid-1932 after implementing a short-lived expansionary policy of open market security purchases, and doubling reserve requirements in 1936 and 1937. In this chapter, the Fed’s policy during the Great Crisis of 2007–2009 and its aftermath is analyzed.

Keywords: Federal Reserve; Monetary Base; Interbank Market; Federal Open Market Committee; Term Interest Rate (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-11807-2_9

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DOI: 10.1057/9780230118072_9

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