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The reason they prop up markets is there is some belief that the Great Depression was made worse by a market crash.
by cheez 6y ago
The reason they prop up markets is there is some belief that the Great Depression was made worse by a market crash.
- IgorPartola 6y agoOr because the people making the rules stand to lose a lot of their net worth if the stocks they hold tank.
- lisper 6y agoThe Great Depression was greatly exacerbated by runs on the banks which were in turn exacerbated by the Fed not providing adequate liquidity. The stock market crash was an ancillary effect of the lack of liquidity: everyone needed cash and no one had any. The crash in and of itself had almost no direct impact on the depth and severity of the depression. It was just a reflection of the sudden scarcity of money. Propping up the markets in response to an economic crisis is cargo cult economics, kind of like trying to treat a fever by putting the thermometer in the refrigerator instead of under your tongue.
- cheez 6y agoJust said made worse, no need to write a PhD :-)