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Politics : Ask Michael Burke
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To: JF Quinnelly who wrote (60444)5/24/1999 9:51:00 AM
From: Freedom Fighter  Read Replies (2) of 132070
 
JFQ,

>>the Fed should have embarked on large scale open market bond purchases to counteract the contraction of the money supply caused by the demand for cash by the public and the desire by banks to raise reserves.<<

I did a little research on the 29 crash last year because I've heard that claim and I've heard that they tried but it didn't work.

I reprinted a bunch of articles from the NY Times during that period. There are several articles about the FED being extremely active in repurchasing treasuries and adding liquidity to the system to counteract the effects of the crash.

Of course I couldn't reprint several years worth of stuff, but I think it's a slight bit of revisionist history on some economists' part to say that the Fed wasn't trying to increase liquidity during that period. They did. It just didn't work. Maybe they made mistakes later on. I am not sure.

Early on, The Times was actually reporting that people should not be worried because the Fed was very active in its efforts to add liquidity.

Wayne
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