Years ago, it became established that the severity and length of the Great Depression were due largely to misguided Federal Reserve monetary policy and the resulting catastrophic bank failures. This result is confirmed by surveys of scholars in the area and books specifically written on economic history. Yet the leading textbooks used in high…

In 1890, the United States government had no agency empowered to control the overall supply of money. Fifty years later, it had a full set of monetary institutions, including a central bank whose structure is much the same today. Further, it had enough experience to know both the promise and the pitfalls of monetary control. How did the nation's…

Central banking in the United States has a long and controversial history dating back to the earliest days of the republic. One of the most widely presented arguments against a central bank has been that the U.S. Constitution does not expressly grant the federal government power to charter a bank. Recently, this issue has received new scrutiny in…

The purpose of this article is to: (1) Examine the historical development of the Federal Reserve System; (2) Provide background on Ben Bernanke, the new Fed chairman; (3) Explain the basic tools of monetary policy used by the Fed; (4) Examine the causes of the Great Depression, a topic of special interest to Bernanke; and (5) Provide some key…