| The United States Federal Reserve was created in 1913 with the intention of eliminating financial panics. There have been eighteen business cycles with seven financial panics including the Great Depression since the inception of the Federal Reserve in 1913. Austrian and Keynesian are two primary views of economics that analyze monetary policy pertaining to the Federal Reserve and the relationship with business cycles. The Keynesian model supports centralized banking by the Federal Reserve and the use of government debt to support decreases in demand during recessions. The Keynesian model also supports the use of fractional reserve banking without a gold standard. Keynesian has been the accepted foundation for the mainstream economic model since the 1930's. The Austrian model opposes centralized banking actions of the Federal Reserve and government intervention, while supporting 100% reserve banking with a metallic standard such as gold. This current study provided a quantitative macroeconomic analysis of the relationships between monetary policy variables from the Federal Reserve and U.S. Government such as interest rates, bank reserves, money supply, credit expansion, and government debt as well as other U.S. economic variables such as income, core inflation, prices, stock market, real estate, U.S. dollar value, unemployment, and GDP. These variables were analyzed using the Johansen Procedure of cointegration regression analysis during all eighteen business cycles since the inception of the Federal Reserve in 1913 categorized by nine economic periods. The economic periods included business cycles for The Great Depression, the Recession of 1953, the Oil Crisis of 1973, the Early 1980's Recession, the Early 1990's Recession, the Dot-com bubble in 2000, the 2008 to 2009 Financial Crisis, the Gold Standard Period pre-1971, and the post Gold Standard Period post-1971. |
