The most influential regional bank is New York’s Federal Reserve Bank because it has more power than other regional banks to influence the economy. Woodrow Wilson overcame those doubts with the creation of a Federal Reserve System that had 12 regional banks overseen by one board in Washington D.C. However, central banking was new and Americans were suspicious of centralized power. The gold standard checked inflation but it wasn’t perfect because there were still other problems associated with it.īy 1914, the gold standard was a long-established economic tradition.
More than one observer commented on how ironic it was: Gold was dug out of African mines and shipped halfway around the world only to be placed underground in central bank vaults.
Gold was scarce, so governments on the gold standard could not increase their currency supply by any significant amount. Backing a currency with gold signaled that a country was a serious player in the world economy. The story of the global economic collapse is tied in part to the gold standard. They kept interest rates too low for too long, which led directly to the Great Depression. The Great Depression was the worst part of this period, but that wasn’t just some random event-it happened because central bankers made poor decisions about monetary policy (interest rates). People couldn’t find jobs currency was basically worthless people even used wheelbarrows to carry money around because they didn’t trust banks. The stock market crashed, the economy boomed, and then it all came crashing down again. The 1920s and 1930s were a time of extreme economic volatility. 1-Page Summary of Lords of Finance A Manmade Depression
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