Monetary Policy Essay

Monetary Policy and the Great Depression are related to each other in an economic way. Monetary policy is said to have specifically effected the Great Depression because of the stabilization of money value and trade. The concept of the effect has been debated over for many years even as recent as now. In short the Great Depression was an economic downturn in the United States. The Great Depression consisted of the stock market crash, the failure of people being able to spend and company unable to make investments. This caused a major decline in output to the economy which then cased a greater increase in the unemployment rates for people throughout the world. There are different opinions as to whether Monetary Policy was or wasn’t a direct …show more content…
I have discovered a few things as to how the Monetary Policy effected the Great Depression. The Federal Government today had previously used policy in order to stabilize the economy in the early 1920’s. The effect was positive and the economy seemed to progress. According to Randall Parker, “The Federal Reserve became increasingly confident in the tools of policy and in its knowledge of how to use them properly” (Parker, n.d. para.5). Therefore, when the Great Depression started in 1929 the government felt they could do the same thing they did in the early 20’s (Parker, n.d. para.37). As a result the economy began to slip and then feel. Though the Monetary Policy was completely ineffective and unnecessary during the Great Depression. There is not a solid fact that this policy couldn’t have helped. The ultimate result of Monetary Policy during the Great Depression wasn’t a positive or a negative thing. In fact, from the research conducted, the policy had a relatively small effect on the Great depression. The large downfall that resulted from the Great depression could have easily been avoided if the Federal Government would have taken it more seriously, and spent more time research what they could have done to head off this