Fiscal and Monetary Policy Before During and After the “Great Recession” of 2008

opinion Essay
605 words
605 words

One of the most interesting facets of The Great Recession of 2008 is that it didn’t really begin in 2008. The fiscal and monetary policy that prompted what we know now as the Great Recession of 2008 really began in 2006 and 2007. What was happening then and why did it take so long for the nation to feel the recession? The answers to those questions explain a great deal about how the Federal Reserve Bank operates and how the different ideologies of economics affect our nation (Sumner, 2011). In 2006 the largest housing bubble we have seen in the past 50 years burst and in December 2007 the recession began. The recession would last for roughly 18 months, officially. However, some economists and citizens would argue that it lasted much longer than that due to the ongoing consequences the nation continued to experience all the way through 2010. Some would say we are still recovering from the recession. When the housing bubble burst the Fed responded by providing large amounts of liquidity to the economy to help soften the blow in the short term. Then the Fed lowered and lowered interest rates to encourage more investors to invest. Despite the Federal Reserve’s best efforts very large financial institutions began to experience some pretty significant trouble and the government had to step in and bail them out (Bailout Recipients, 2014). JP Morgan Chase, Citibank, Bank of America, and Lehman Bros. to name just a few were referred to as “too big to fail.” The nation barely escaped a cataclysmic financial crisis by stepping in to save the banks. As bad as the great recession was, it could have been so much worse. Fortunately for the US social welfare programs were firmly in to aid those impacted hardest by the recession. Our nation sa... ... middle of paper ... ...(2014, February 24). Retrieved from Pro Publica: Lowrey, A. (2014, FEBRUARY 21). How the Fed Saw a Recession, Then Didn’t, Then Did. Retrieved from The New York Times: Pettinger, T. (2011 , September 23). Policies to avoid a Recession. Retrieved from Sumner, S. (2011, FALL). Re-Targeting the Fed. Retrieved from National Affaris: Thoma, M. (2013, August 27). The Great Lesson from the Great Recession. Retrieved from The Fiscal Times:

In this essay, the author

  • Opines that the fed would need to create money electronically to buy long-term securities to encourage banks to lend money or offer credit.
  • Concludes that the policies and decisions that led to the great recession have taught us that we are not immune to financial downturns or economic busts.
  • Cites thoma, m. (2013, august 27). the great lesson from the great recession.
  • Explains how the federal reserve bank operates and the different ideologies of economics affect our nation.
  • Cites lowrey, a. and pettinger, t. on how the fed saw a recession, then didn’t, then did.

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