Federal Reserve Actions during the Great Depression in 1929 and 1930, Essay

Federal Reserve Actions during the Great Depression in 1929 and 1930, and the Global frugal Recession of 2008 and 2009 - Essay ExampleThe main reason for this is due to the circulation of goods in different continents. Besides, effects of commerce are experienced on a world(a) scale. Therefore, an economical slump in the US will also be faced in Europe and the Far East. There are two scathing periods in history whereby the global economy has slumped markedly, affecting millions of people around the world. The first of all is the Great Depression of the late 1920s and more recently, the Global economic Recession of the late 2000s. Various factors have been implicated in these notable economic slumps in history, but these vary widely according to many economists, pundits and authors of political economy books all have given their opinions on what may have ca enforced the Great Depression and the Global sparing Recession. This essay analyses the Great Depression and the Global Eco nomic Recession in detail by analyzing the causes and the role that Federal Reserve Actions played in the economic slumps. The paper also describes opinions concerning the economic slumps from four economists. The first two are Jeremy Attack and Peter Passell, authors of the book, A New Economic View of Ameri discharge History From Colonial Times to 1940. The other authors are Jonathan Hughes and Louis Cain, authors of, American Economic History. In order to understand arguments put forth by these authors, it is important to analyze the Federal Reserve System and the two economic slumps. The Federal Reserve System Federal Reserve actions have been the countermeasures after the Great Depression and the Global recession of 2008. The Federal Reserve is an independent cardinal bank that works in an independent manner since its actions are not ratified by the Congress or President. The Federal Reserve System was launch in 1913 by Congress and its role was to supervise all banking opera tions in the US by raising or lowering interest rates, and to frame of reference the US economy through institution of sundry(a) economic policies1. As much as it is independent, this body is still answerable to Congress on various issues. The Federal Reserve System comprises seven Board of Governors members and 12 Federal Reserve banks that are distributed in various cities of the US. The Federal Open Market commissioning (FOMC) is the policy maker of the Federal Reserve System and it affects monetary policy through many ways, some of which are Open market operations change of reserve requirements and adjusting discount rates. These three tools are used to expand or tighten money supply. An example of this is in inflation. In case the FOMC wants to control inflation, it can restrict and control the US governments money supply through selling of government securities and increasing the amount of money which banks need to use for reserve requirements2. These two actions by the F OMC remove money away from circulation, hence inflation would be controlled. This is because, a lower supply of money leads to less spending, and hence, in that respect will be lower prices. As a result of these, economists argue that Federal Reserve actions are entirely responsible for economic slumps since they control inflation through their actions. Furthermore, the FOMC is able to amplify interest rates for purposes of controlling inflation. This is because, by raising rates of interest, this would make it expensive to borrow money hence, consumers would find it easier to further money instead of spending it. The result of this is that prices of commodities would be lowered. With time, the initial roles of the Federal Reserve System have expanded due to the changing economic realities. foe example, the Great Depression changed the manner in which the system operated so that future economic slumps would not be the case. However, this was not the case,