Part 6/9:
Evidence indicates that from 1929 to 1933, the U.S. experienced a significant contraction in the money supply by about 13 percent and witnessed the closure of approximately one-third of its banks. Thus, the conclusion can be drawn that the Federal Reserve possessed the capability to prevent this decline, but ultimately failed to do so. Had the money supply remained steady, economists argue, the downturn may have resulted in a standard recession rather than the catastrophic depression that ensued.