Quantitative easing became a hot topic last year, as the Federal Reserve dropped the target for federal funds rate to near zero.  But Richard Anderson of the St. Louis Fed reminds us that this was the second time in US history that the "monetary authorities" tried quantitative easing:

During 1932, with congressional support, the Fed purchased approximately $1 billion in Treasury securities (half, however, was offset by a decrease in Treasury bills discounted at the Reserve Banks). At the end of 1932, short-term market rates hovered at 50 basis points or less. Quantitative easing continued during 1933-36. In early April 1933, Congress sought to prod the Fed into further action by passing legislation that (i) permitted the Fed to purchase up to $3 billion in securities directly from the Treasury (direct purchases were not typically permitted) and, if the Fed did not, (ii) also authorized President Roosevelt to issue up to $3 billion in currency.2 The Fed began to purchase securities in the open market in April at the modest pace of $50 million per week.

Read the rest of Anderson's short history of quantitative easing in the Thirties in the latest Monetary Trends, here.