The problem was that the powers that be did not know what would happen.

Reader comment on: Interviews With Eugene Fama and John Cochrane

Submitted by Lyle (United States), Jan 15, 2010 10:13

Recall that a run on money market funds had started, they could all have gone under, freezing all of the economy, there was a good chance Morgan Stanley, and Goldman were next. Quickly the NYSE and NASDAQ would have been shut down as in 1914, and the fed would have had to roll lots of trucks to banks with cash. In late sept I went to my bank branch and they were out of $100 bills, which has never happend otherwise. Given the results in 1933 of a total loss of confidence in the banking system. (25 % of deposits went into mattresses) leading to the national bank holiday, one could not be sure. What chance are you willing to take of great depression II?

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