A Lecture At The George Washington University

This article is about the circumstances that led to the collapse of the economy in 1929. It relates to my research proposal because I am evaluating historic events that led to the financial crisis of 1929. The article discusses how deflation played an important role in expanding the depression, and how the Gold Standard, a monetary system in which a country’s government allows its currency unit to be freely converted into fixed amounts of gold and vice versa, was an extremely bad decision because it caused the dollar to lose its value. This source was informal because it discusses prehistoric events that led to the

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).

Our economy is a machine that is ran by humans. A machine can only be as good as the person who makes it. This makes our economy susceptible to human error. A couple years ago the United States faced one of the greatest financial crisis since the Great Depression, which was the Great Recession. The Great Recession was a severe economic downturn that occurred in 2008 following the burst of the housing market. The government tried passing bills to see if anything would help it from becoming another Great Depression. Trying to aid the government was the Federal Reserve. The Federal Reserve went through a couple strategies in order to help the economy recover. The Federal Reserve provided three major strategies to start moving the economy in a better direction. The first strategy was primarily focused on the central bank’s role of the lender of last resort. The second strategy was meant to provide provision of liquidity directly to borrowers and investors in key credit markets. The last strategy was for the Federal Reserve to expand its open market operations to support the credit markets still working, as well as trying to push long term interest rates down. Since time has passed on since the Great Recession it has been a long road. In this essay we will take a time to reflect on these strategies to see how they helped.

The Great Depression (1929-1939) was the deepest and longest-lasting economic downturn in the history of the Western industrialized world. However, many wonder what was the cause of such economic downfall. According to Source A one of the reasons was that “There was a general rush by a large portion of our population to turn bank deposits into currency or gold - - a rush so great that the soundest banks

The first president of the United States, George Washington, was born in Virginia, on February 22, 1732.he didn’t have much formal training as a youngster, but he learned to survey land at sixteen. Later on he became the county surveyor.

Wooden teeth? Impossible strength? Slave owner? Three myths you may know about the first president of America. What if two out of three of those myths were false and one true? Which one would you believe to be true and which two would be false? George Washington was known for an abundance of things, for example, he was the commander of the Continental Army, and he practiced the Anglican/Episcopalian religion. What many people do not know, is that President Washington, did not have a middle name because during the 19th-Century, middle names weren’t normal as they are today. Born on February 22, 1732, George Washington probably didn’t plan on becoming a worldwide leader and commander and chief. As he grew older, his father, Augustine, and mother, Mary Ball Washington had a quite “popular” business that they owned and Washington, at an early age would then inherit the family ‘business.’ Washington also had health issues but that did not stop him from treating the people he employed like actual human beings, instead of animals like everyone else. Even people who are born into a difficult and harsh family business, with health problems can still be genuine human

The discussion of whether the Federal Reserve should raise the federal funds rate is a highly contentious one. Members of the Federal Reserve (“Fed”) and academic economists disagree about what constitutes appropriate future macroeconomic policy for the Unites States. In the past, the Fed had been able to raise rates when the unemployment rate was under 5% and inflation was at a target of 2%. Enigmatically, since the Great Recession and despite a strengthening economy, year-over-year total inflation since 2008 has averaged only 1.4%—as measured by the Personal Consumption Expenditures Price Index (“PCE”). Today, PCE inflation is at 1-1.5% and has continuously undershot the Fed’s inflation target of 2% three years in a row. (Evan 2015) In the six years since the bottom of the Great Recession the U.S. economy has made great strides in lowering the published unemployment rate from about 10% back down to about 5.5%. In light of this data, certain individuals believe that the Federal Reserve should move to increase the federal funds rate in 2015 because unemployment is near 5% and inflation should bounce back on its own (Derby 2015). However, this recommendation is misguided.

The Federal Reserve was faced with the ultimatum of either preserving the gold standard currently in place, or to dent the depression as quickly as possible. Denting the depression would require much easier credit than the latter, but the “gold standard handcuffed governments around the world (econlib).” After Britain went off gold, higher interest rates initiated by the Federal Reserve followed to “stem gold outflows.” Once this happened, “the discount rate went from 1.5 to 3.5 percent,” which was a “huge increase” considering the current situation of the economy. Although the gold standard was not the sole cause of the depression, there is a trace amount of evidence suggesting that it helped foster the depression in that “once countries abandoned it” their “economies usually began to grow again (econlib).” Despite the fact that the actions of the Federal Reserve were not the leading causes of the Depression, it is important to note that the decision to increase interest rates only instigated the crash of 1929, while also highlighting the complications of the gold standard, which then led to its dismantlement and the initiation of slow but sure recovery.

George Washington is seen, to the general public, as a larger than life figure. As a society, Americans have a tendency to view him as a legend, even to the point of creating stories that tell us false stories about his childhood and adulthood. Myths are taught to us from a young age about how the very first president had wooden teeth, and that he was somehow so pure that he could not tell a lie, and that he had such magnificent upper body strength that he threw a silver dollar across the Pontiac. George Washington was both an experienced military leader and a strong political leader, but in which field did he have the most impact?

At the end of the recession from 2001-2004, a period that no economic growth, the Federal Reserve recommend that interest rates stay as low as possible. The idea behind this thought was that lower interest rates would attract people to investment in housing, business loans and other areas of economic growth. The idea worked, as more and more potential homeowners entered the market, brought in by the perception that they could afford to pay monthly mortgage rates. However, in 2004, the price of oil started to rise, and the Fed responded by gradually increasing interest rates (Beese, 2008).

Eight decades has elapsed since the outbreak of the Great Depression, but the continuing mystery of its cause keep provoking academic debates among scholars from various fields. Eichengreen and Temin joint the debates by linking the gold-standard ideology with the cause of the Great Depression. They content that because of this ideology monetary and fiscal authorities implemented deflationary policies when the hindsight shows clearly that expansionary policies were needed. And these contractionary policies consequently pushed the stumbling world economy into the Great Depression. Eichengreen and Temin put heavy weight on analyzing why the prewar gold standard could be a force for international financial stability while interwar gold

The single most important factor that led to the great depression was government misunderstanding of economics and the affects of economic implementation. Our economy had experienced many panics and recessions up to 1929 and recovered without the level of intervention of the 1930’s. Governmental tools such as monetary policy, fiscal policy, taxation, and tariffs were used with the reverse of the intended affects and prolonged the depression. The Federal Reserve’s restrictive policies contributed to the depth and length of the depression after the second wave of bank failures in 1931 and the Fed’s 936-1937 policies contributed to the 1938 recession (Hughes & Cain 2011, p. 488). The taxation and tariff policies stifled economic growth and consumption.

In the insightful and informative novel “After the Music Stopped: The Financial Crisis, the Response, and the Work Ahead” by Alan S. Blinder, the author offers an intriguing point of view towards what factors caused the 2008 financial crisis, the ways in which the federal government acted and regulated the crisis as well as what “10 financial commandments” bankers, regulators, and market participants should be attentive of in the future. Before delving into the novel itself, let’s take a look at the author, Alan S. Blinder. Blinder is an American economist who serves at Princeton University as the Gordon S. Rentschler Memorial Professor of Economics and Public Affairs in the Economic Department, and the Vice Chairman of the Observatory Group. In addition, Blinder was involved in government affairs when he served on President Bill Clinton’s Council of Economic Advisers from July 1993 to June 1994 as well as serving as the Vice Chairman of the Board of Governors of the Federal Reserve System from June 1994 to January 1996. As Vice Chairman, he advised against raising interest rates too rapidly to slow inflation because of the delays in prior rises feeding through into the economy. In addition, Blinder advised against overlooking the short term costs in terms of unemployment that inflation-fighting could cause. In more recent years, he has focused much of his attention towards academic work in monetary policy and central banking along with writing articles for

In the time leading up to and throughout the Great Depression the Federal Reserve struggled to enact monetary policy to ease the turmoil in the economy. Due to a lack of technology, there was a delay between events in the economy and when the Fed received information on the event (Richardson). Additionally, the Fed was decentralized resulting in contradicting policies between districts. Disagreements amongst the governors on which institutions the fed should protect during bank runs caused hundreds of banks to fail (Richardson). Furthermore, the United State was one of the world’s largest economies on the gold standard, and thus the fed’s monetary policies were forced upon other countries using this standard leading to a global economic crisis (Bernanke).

Previously stated, the federal funds rate was cut to as low as 1% during the early 2000’s. Not only did this turn investors away from investing in treasury bonds, but it also cheapened the cost of borrowing money for banks. This spurred action on behalf of financial institutions to offer investments connected to the continually increasing, and seemingly risk-free, housing market. Due to a combination of greed and ignorance on behalf of financial institutions and credit rating agencies, the proverbial housing bubble increased until it finally reached its peak in 2006, and then began to burst at the end of that year and on into 2007. What exacerbated the decline to such a high degree was the strong connectivity of the financial institutions through their complex transactions that related to mortgages. The main factors that were involved in the impending crash were the increased offering of subprime mortgage loans and collateralized debt obligations, or CDOs. Critically analyzing the effects of these products will aid in the conversation of financial institutions role in sparking The Great Recession.