Today, do to the Great Depression, we have a much better understanding on how to prevent a crash then we did in 1929. For Example Carter tried to force a Recession in 1979, so that by 1980 the US would be coming out of it (he failed the recession came to late in 1980, right in the middle of the election year). Reagan wanted to make sure that by 1984 the US would be out of the Recession, so he engineered another recession in 1981 that lasted till 1982 (one of the first "double dip" recessions), so that by 1984 the country would be on the re bound.
http://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States
Now, the GOP reluctance to do job creation activities after the 1991 recession, meant high unemployment during the 1992 election year (and why Bush sr lost that election).
Clinton knew that as soon as he reappointed Alan Greenspan, Alan Greenspan would restrict money flow and cause a recession (Greenspan was know to prefer the GOP, so he was going to do his best to cause a recession and make it easier for Bush to win the 2000 election). Thus Clinton waited for the last second to renominate Greenspan, thus delaying the onset of the 2001 recession till after the election.
I bring this up for as you can see, Recession can (and in most cases are) product of the Federal Reserves decision that the economy is getting to hot. Thus the Federal Reserve knows how to force a recession and how to ease a recession, the real question is it willing to do so?
Now, one aspect of this power of the Federal Reserve is that it is limited, the Federal Reserve can pour more and more money into the economy via the banks, but if the banks are not leading that money out it does no good. In most recessions it is sufficient, but every so often Congress has to step in and provide jobs. That is what Congress did in the 1930s, the 1970s and needs to do today, but has REFUSED to do so. The Fed Reserve members are coming out more and more saying CONGRESS has to provide those jobs for without those jobs, what the Fed is doing is self defeating. No one has jobs, so they are NOT borrowing money, so the banks hold onto the money (or use it to invest in something that is making money, right now that it is the US Stock Market).
Thus, do to the inaction of Congress, most of the money the Feds is leaning to the Banks is going into the Stock Market. If Congress would provide money for jobs, those jobs would give people incentive to borrow and get this economy going.
Thus the Fed KNOWS what is needed, KNOWS it can NOT do what is needed (Congress can, the Fed can not), but Congress has refused to do what is needed. Thus the Fed has a choice, a choice it does NOT want to make. Increase money supply and push up the Stock Market, hoping that sooner or later that such investors will take some of their money out and use it elsewhere and thus give the economy the jump it needs OR pull out the money supply and crash the Stock Market, thus forcing people presently in the stock market to invest they money elsewhere so the economy gets its needed kick start from below.
Thus the Fed wants to drag out this problem hoping that Congress will see the errors of they ways and passes a law creating the needed job creation program This decision by the Fed is also supported by a fear that if the Fed would force a Recession, the Fed will get the Blame not Congress.
The problem with the above solution is that it is just delaying the down fall. The Fed will do what it can to delay the down fall but it is running out of options, and Congress which CAN solve this problem does NOT want to, for it means spening money on people who tend NOT to vote GOP.
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