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To: Ilaine who wrote (106694)	6/5/2001 4:04:41 PM
From: craig crawford	Read Replies (2) \| Respond to of 436258

you're such a pain in the ass. here! you are all a bunch of bears who love gold, so this should be reliable enough! gold-eagle.com Most economists and Wall Street pundits believe that the Federal Reserve actually contributed to the economic collapse with tight monetary policy. In actuality, the Fed attempted to be extremely expansionary through 1932. After the stock market crash of 1929, the Fed cut the discount rate from 6% to 2% by the end of 1930. The discount rate dropped as low at 1.5% in 1931 as the Fed frantically bought government securities in an attempt to expand the money supply until 1933. But the problem was the "pushing on a string" phenomena. No matter how hard the Fed tried, by providing controlled reserves to the banks, it didn't succeed in increasing the money supply. The money supply actually shrunk because banks were either unable or unwilling to increase their bank lending. Potential bank customers who were judged reasonable credit risks were unwilling to borrow because their earnings prospects were deteriorating, and they knew it was foolish to borrow and buy something today when the price would be lower next month. Therefore, this was a "demand" problem from potential creditworthy borrowers. Other entities that wanted loans were often deemed to be poor credit risks in an environment of spiraling credit defaults. The problem was exacerbated as individuals hoarded cash, causing monetary velocity to plummet. David W. Tice 20 October 1998