The Federal Reserve Caused the Great Depression

I will be defending my original case in this round. To My Opponent: 1. Thank you for clearing that up. 2. If I don't get to it, can you rechallenge me on the WWI debate? I have had some unexpected difficulties and am committed to at least 3 more debates, my other debates aren't in voting period, and I need to make an argument (I've never really done that). I. How Did the Federal Reserve Cause the Great Depression? I.i. Fourth Paragraph, part I As stated originally, the Federal Reserve used incorrect monetary policy during the years before the Great Depression. To help the economy that was in a slump, they lowered interest rates to a near zero level, or a expansionary monetary policy. But they kept the rates at this level for a long time after the recovery, and into a long time after the beginning of the boom period. An expansionary monetary policy, due to its increase of money into the economy, during a boom period is going to result in inflation because too much money is chasing two few goods. So, the economy was booming too fast. When the Federal Reserve raised interest rates to try to counter the inflation, there was a slight dip that caused the bigger dip. "All of the money flowing into the economy thanks to the Federal Reserve and their low interest rate created inflation. As incomes went up, so did the price of goods and business costs. The economy was now dependent upon the inflow of money from the Federal Reserve and the low interest rates. As a result less loans were being created and less money was able to flow into the economy."[1] So yes, there was two much money in the economy, which caused inflation, which then caused a restriction on the amount of money in the economy, which caused the Great Depression. But all of this can be traced back to the Federal Reserve for pumping to much money into the economy in the first place. I.ii. Fourth Paragraph, part II Again, this can all be traced back to the Federal Reserve. If the stock panic was caused by inflation, which was caused by the Federal Reserve, then the Federal Reserve can be called the true cause of the Great Depression since they caused the cause of the crash. "The Fed saw no particular need to try to stem the panics."[2] So in addition to causing the crashes in the first place (including the bank panics), they failed to try to stem the crashes from worsening. So here, the Fed can be traced back to causing almost all the causes of the Great Depression, and made the Great Depression by failed to help stop the crashes they created. I.iii. Final Arguments "Instead, the Federal Reserve collapsed purchasing power and forced 25 percent of the workforce into unemployment. This massive destruction of liquidity began when the Federal Reserve responded to the 1929 stock market crash by allowing the quantity of money to decline by 2.6 percent over the next year. This extremely tight monetary policy put the economy into severe recession."[3] "The Federal Reserve was derelict in this responsibility during the three banking crises that culminated in the Great Depression. Indeed, more often than not the Federal Reserve sold bonds and raised the discount rate, thus reducing banking liquidity when it should have increased liquidity. The first banking crisis began in the autumn of 1930 when the Federal Reserve stood aside and permitted banks to fail in the South and Midwest. The result was to undermine confidence in banks. Runs on banks spread as depositors rushed to convert their deposits into currency."[3] "The Fed responded to these events by again raising the discount rate, making it harder for banks to meet the cash demands of depositors."[3] So here, the Federal Reserve can be traced back to all your causes of the Great Depression, including incorrect monetary policy, inflation, lowering of money supply, the stock market crash, among others. And when the Federal Reserve could have turned around the crash, they actually made it worse. II What Did the Federal Reserve Do Wrong? Ok. So my opponent agrees with my contentions here. That is a concession, but not a full one. Arguments extending this are above. III. The Federal Reserve Failed To Help the Great Depression But, the Great Depression could have been stopped if the Federal Reserve had not made those three mistakes listed in my original argument. It would not have been a Depression, but merely a small recession if the Federal Reserve had taken the correct course of action. So here, the Federal Reserve did cause the Great Depression by failing to help in stopping the decline, and actually making it worse. Thank you. Sources: [1]:http://www.stocks-simplified.com... [2]:http://www.wnd.com... [3]:http://www.hoover.org...