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Originally Posted by GermanBJJ
No, the Fed hasn't admitted as such. The Fed didn't engineer the Great Depression but it didn't do much to alleviate it which caused it to get worse. If there was never a Federal Reserve, the Great Depression would have still occurred. You can't have such massive over-valuation of an asset class with the inevitable re-valuation without having a recession/depression.
Galbraith has a great book called "A History of Financial Euphoria" that documents other historical recessions/depressions that resulted from over-valued asset classes.
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Here's how Friedman summed up his views on the Fed and the Depression in an Oct. 1, 2000, interview with PBS:
PBS: You've written that what really caused the Depression was mistakes by the government. Looking back now, what in your view was the actual cause?
Friedman:: Well, we have to distinguish between the recession of 1929, the early stages, and the conversion of that recession into a major catastrophe.
The recession was an ordinary business cycle. We had repeated recessions over hundreds of years, but what converted [this one] into a major depression was bad monetary policy.
[u]The Federal Reserve System had been established to prevent what actually happened. It was set up to avoid a situation in which you would have to close down banks, in which you would have a banking crisis. And yet, under the Federal Reserve System, you had the worst banking crisis in the history of the United States. There's no other example I can think of, of a government measure which produced so clearly the opposite of the results that were intended.
And what happened is that [the Federal Reserve] followed policies which led to a decline in the quantity of money by a third. For every $100 in paper money, in deposits, in cash, in currency, in existence in 1929, by the time you got to 1933 there was only about $65, $66 left. And that extraordinary collapse in the banking system, with about a third of the banks failing from beginning to end, with millions of people having their savings essentially washed out, that decline was utterly unnecessary.
At all times, the Federal Reserve had the power and the knowledge to have stopped that. And there were people at the time who were all the time urging them to do that. So it was, in my opinion, clearly a mistake of policy that led to the Great Depression.
Although economists have pontificated over the decades about this or that cause of the Great Depression, even the current Fed chairman Ben S. Bernanke, agrees with Friedman's assessment that the Fed caused the Great Depression.
FRB Speech, Bernanke -- On Milton Friedman's ninetieth birthday -- November 8, 2002
Bernanke:"Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again.
Best wishes for your next ninety years. "
They not only didn't alleviate it, they literally compounded the problem. Central banks are bad. I can not say it any plainer. So I must respectfully disagree with you. Also I did not use the term engineer and the intentional action I referred to is discussed by the two quoted individuals; Milton Friedman and Ben Bernanke.
I really must disagree with you about there being a great depression without the Fed as does economist Milton Friedman in the above quotations. The Federal Reserve is an external entity. It exists for the sake of profit for its shareholders only. It is not "independent within the government" as is claimed. There are other books on the topic I would urge you to read before you make up your mind.