Politická ekonomie 2014, 62(5):701-719 | DOI: 10.18267/j.polek.977

Menová politika Federálneho rezervného systému v rokoch 1929-1933

Miroslav Titze
Vysoká škola ekonomická v Praze.

The Federal Reserve Monetary Policy 1929-1933

The paper discusses Federal reserve's monetary policy during banking crisis interim 1929 - 1933. Main goal of the paper is to discuss the monetary policy implementation problems during 1930s based on Real-bills and Riefler-Burgess doctrine. First part of the paper reveals possible conflict between FED's monetary tools and targets arising from gold exchange standard. Expansionary monetary policy during banking crisis was potentially strongly limited by conflict among U.S. financial stability and sustainability of the gold standard. The second part describes monetary policy implementation during 1920s. The third part discusses FED's open market operations during the banking crisis and the fourth part explains the behavior of the interest rates. Finally, the work concludes that FED managed liquidity of U.S. banking system inappropriately and caused many bank deposit suspensions. FED considered monetary condition to be easy and sufficient to cover needs of production. Money interest rates responded very moderately to shortage of banking system's liquidity. We can find the origin of quantitative easing in 1932 when FED first bought large quantities of government securities. This policy was insufficient because of short term duration and the gold outflow neutralizations.

Keywords: interest rates, open market operations, monetary policy implementation, FED, banking crisis
JEL classification: E44, E52, E58

Published: October 1, 2014  Show citation

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Titze, M. (2014). The Federal Reserve Monetary Policy 1929-1933. Politická ekonomie, 62(5), 701-719. doi: 10.18267/j.polek.977
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