> Before the great depression and the federal reserve, weren't there financial crises/panics over and over? They were tiny, and they were mild by comparison.

> Before the great depression and the federal reserve, weren't there financial crises/panics over and over? They were tiny, and they were mild by comparison. Even with the Fed, not exercising "flexibility" has been a better option. In 1920, the Dow dropped 47%, deflation hit with prices dropping 20%, wholesale prices dropped 37%, and unemployment went over 10%. Neither the Federal Reserve nor the federal government did anything. You have never heard of this intense deflationary depression because it didn't last for 11 years. It lasted for 18 months. Edit: > but obviously there was a reason we set up all those institutions and laws in the 30s, because the way things worked had become untenable. There does not. Poorly run institutions are a staple of the Modern Era. The reason the Fed was set up was because it aligned with the philosophy of central control within the progressive movement. Until Wilson, no presidency had ever been called an "administration." (For an unbelievably sad look at that former president, look at his favorite book called Philip Dru: Administrator.)