Changes

One job of the Federal Reserve is to control [[inflation]] by regulating the [[free market]].<ref>http://web.archive.org/web/20070818201731/http://www.peterjaworski.com/Friedman</ref> One of its main functions is to set the amount of money that banks must keep in reserve and to set the interest rates for money it lends to banks.

One job of the Federal Reserve is to control [[inflation]] by regulating the [[free market]].<ref>http://web.archive.org/web/20070818201731/http://www.peterjaworski.com/Friedman</ref> One of its main functions is to set the amount of money that banks must keep in reserve and to set the interest rates for money it lends to banks.

The Fed made the [[Great Depression]] much, much worse by utterly failing in its primary responsibility. It simply did nothing, as hundreds and thousands of banks failed (see [[bank run]]). What it was supposed to do was lend them enough money to keep going! [http://www.thefreemanonline.org/featured/the-great-depression-according-to-milton-friedman/]

The Fed made the [[Great Depression]] much, much worse by utterly failing in its primary responsibility. It simply did nothing, as hundreds and thousands of banks failed (see [[bank run]]). What it was supposed to do was lend them enough money to keep going!

* Friedman and Schwartz argued that all this was due to the Fed’s failure to carry out its assigned role as the lender of last resort. Rather than providing liquidity through loans, the Fed just watched as banks dropped like flies, seemingly oblivious to the effect this would have on the money supply. [http://www.thefreemanonline.org/featured/the-great-depression-according-to-milton-friedman/ The Great Depression According to Milton Friedman]

In 2008 the Fed became a major player in many new ways, taking over several major banks (ostensibly to prevent total economic collapse) and making trillions of dollars in guarantees. See [[Financial Crisis of 2008]].  

In 2008 the Fed became a major player in many new ways, taking over several major banks (ostensibly to prevent total economic collapse) and making trillions of dollars in guarantees. See [[Financial Crisis of 2008]].