Question

Milton Friedman argued that the Bank of United States:

A	could not pay back back any money to their depositors when they closed, and this was evidence that the Bank of United States was correctly closed.

B	was Jewish owned and therefore received preferential treatment (was treated better than other banks) by regulators and other banks.

C	Should have been closed earlier

D	was not much different than other banks that were not closed

Answer 1

Milton Freidman argued that the Federal Reserve (that was the Bank of United States during that time) should have provided the banks (that eventually closed) with additional cash to meet the demands of the banks depositors. Friedman argued that the Fed should have used open market operations to increase money supply by making large purchases of government bonds. However, Friedman argued that the Bank of United States did not act as a lender of last resort.

D. was not much different that other banks that were not closed.