Victoria Thompson 11/23/12 Econ 1740 e-portfolio Assignment Freedom To Choose

During the early years of the Great Depression, what did the Federal Reserve do or not do and what was the effect on the economy?

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2. During the early years of the Great Depression, what did the Federal Reserve do or not do and what was the effect on the economy?
During the Great Depression the Federal Reserve failed to take action to control the plummeting of the economy as well as maintain it. Freidman states, “Instead of actively expanding the money supply by more than the usual amount to offset the contraction, the system allow the quantity of money t decline slowly throughout 1930.”

The Federal Reserve came up with plans to cushion the Bank of United states but the plan failed due to the withdrawal of arrangement by the New York Clearing house. Freidman believes that the it would have been better for the Federal Reserve to provide banks with more cash flow by “engaging in large-scale open market purchases of government bonds.”

Freidman later states,

The evidence by now is all but conclusive that the System not only had the legislative mandate to prevent the monetary collapse, but could have done so if it had used wisely the powers that had been granted to it in the Federal Reserve Act.

Because the Federal reserve did not increase the monetary flows, banks were not able to meet demands that caused the fail of the economy.

3. Comment on this statement - “[World War II’s] effect on public attitudes was the mirror image of the [Great] Depression’s. The [Great] Depression convinced the public that capitalism was defective; the War, that centralized government, was efficient.”
Freidman believed that neither statement were true. The fault was not of the private business owners but of the government. He felt that the lack of their involvement and planning was one of the leading causes in the fall of the economy.

Government tends to put things into action to temporarily repair a situation, but the action that was put into play many times becomes permanent as it did with changes during the Great Depression. It looked as though Centralized Government would be the new way of things but has not held to be true today. The Government was given a higher budget during the war to aid. This put the people’s faith in the Government to resolve the issue.

Later Freidman goes on to mention that the lack of government effort to plan has not been done away with but has been focused on a different area. It is no more efficient in finding a solution for poverty. As we see in the video, “U.S. Debt” There is still a huge deficit in the funds that would be needed. He says, “The failure is deeply rooted in the use of bad means to achieve good objectives.”
4. Comment on this statement - “Government measures that promote personal equality of opportunity enhance liberty; government measures to achieve ‘fair share for all’ reduce liberty.”
What I take from all of this is, How do we provide equality without taking away freedoms? I read a story in my humanities class where everyone was forced to be average to promote equality. People who were gifted were given handicaps to prevent them from being any better than anyone else thus taking away many given freedoms that we have.

Freidman goes into an explanation of how those who have decisional power become more than equal to those who are being ruled. The problem when imaging equality is that it is all a personal perception. I love the quote that Freidman mentions by Karl Marx, “To each according to his needs, from each according to his ability.” People are to do the best with what they have and can provide for themselves make hard work and dedication provide your place on the totem pole. There will always be those who are handed things in life or born with abilities but if we could live by that quote, that would promote what I would consider “fairness.” We all have choices and opportunity in this life. Your choices decide your path, which allows you to fall in the place of opportunity.

I personally do not believe that the rich should give to the poor by force. Sure if they wish to be charitable they have all rights but there are many who abuse our systems and those who really need assistance aren’t able to get it. The systems we have now are not effective as they should be. If people did not have something to fall back on they may take things more seriously. I believe that at times by supporting equality we are not only losing freedoms, we are enabling individuals at the cost of others.

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