Various danger signs in the global economy have a lot of people worried these days, and (as always seems to happen during these times) people are paying a lot of attention to what the Fed will or won’t do, or should do, or shouldn’t do. Which begs the question of why we have something called the Federal Reserve System in the first place.
Historically, the reason we have something now called the Fed is because of a banking panic that happened in 1907. The 1907 Knickerbocker crisis was a financial crisis that took place over a three-week period starting in mid-October 1907, when the New York Stock Exchange fell almost 50% from its peak the previous year—a much bigger drop than the 1929 drop. (So take note: The 1907 stock-market event was bigger than the 1929 event, yet didn’t cause a Great Depression. Also note, the Fed already existed in 1929 and yet failed to prevent the Great Depression.)
With regard to the 1907 crash, we learn from Wikipedia:
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