Describe An Event Which Its Result Appears To Be Against Its Original Purpose

FED’S Open Market Policy
Name:
Institution:
Date of submission
FED’S Open Market Policy
After the end of WWI, Benjamin Strong the governor of the New York FED realized that power of open market instead of relying on gold as a central factor in the control of credits. Strong managed to increase government's recession from 1923 by purchasing government securities that influenced the availability of credits in the banking sector of the USA (Wheelock, 1989). The banks adopted the open market policy in their own monetary policies. This policy enabled people to borrow money due to the "boom" effect as well as to encourage domestic businesses and increase European monetary exchange. However, the policy resulted to the inability to control the flow of reserves. Furthermore, the FED management never took into consideration the negative effects especially on the stock market which later proved to be detrimental to the country’s economy. Thus, the economic disadvantages were heavier than its advantages (Wheelock, 1989).
The objectives of the open market policy as enacted by the FED artificially lowered the rates for borrowing for the consumers to ensure domestic development and recession from the initial crisis in during the WW1 caused by the inflation of monetary supply. However, this objective was not met as the FED immediately raised the rates of interests in the banks which led to severe deflation coupled with a sharp drop in the prices of commodities and the stock market (Wheelock, 1989). Most consumers sold off all their invested properties due to the strength of dollar coupled with a great red...