ipl-logo

Ben Bernanke's In The Great Recession

255 Words2 Pages

The recent financial crisis is attributed in many ways to financial innovations in the mortgage market that made it easier for people with high risk of default to access credit. Although these financial innovations gave millions of Americans an opportunity to purchase a home, their overall social benefit is questionable (Johnson, Kwak 2012). In his address at the Federal Reserve Bank in Atlanta in March 2007 Ben Bernanke pointed out, that despite "the challenges and the risks that financial innovation may create, we should also always keep in view the enormous economic benefits that flow from a healthy and innovative financial sector" (Bernanke 2007). The goal of financial innovations is to make financial intermediation easier, moving capital to where it is needed most. Bernanke continued to state that financial innovations promoted economic growth, and made the economy more resilient to busts. However, In the aftermath of the Great Recession it is clear that the risk of financial innovation can lead to a devastating cost to society. Johnson and kwak (2012) argue that "we cannot say that innovation is “good” simply because there is a market for it. The fact that there was a market for new houses does not change the fact that building those houses has turned out to be a destructive use of capital."

Show More
Related

  • Robber Barons In The Gilded Age

    203 Words  | 1 Pages

    The charge about the old days of the American economy—the nineteenth century, the “Gilded Age,” the era of the “robber barons”—was that it was always beset by a cycle of boom and bust. Whatever nice runs of expansion and opportunity that did come, they always seemed to be coupled with a pretty cataclysmic depression right around the corner. Boom and bust, boom and bust—this was the necessary pattern of the American economy in its primitive state. In the US, in the modern era, all this was smoothed out.

    Read More

  • Delano Roosevelt Rhetorical Analysis Essay

    1574 Words  | 7 Pages

    The Stock Market Crash of 1929 fell with a domino effect, driving people out of businesses, causing employers to fire workers because of money shortage, consequently, those workers to go broke and become homeless, and eventually setting the country into the hardly-reversible state of hardships that came with the Great Depression. Quite obviously, the country was impoverished. Panic arose as people started to withdraw all their savings from the banks as soon as they heard that the stock market had plunged, trying to keep their money safe and secure, manually. After breaking down the core issues of the Depression in his “Fireside Chat”, Roosevelt claimed, “I can assure you that it is safer to keep your money in a reopened bank than under the mattress.” This advice stuck with many after hearing their president speak so knowledgeably about the matter.

    Read More

  • During The Great Recession Wells Fargo

    128 Words  | 1 Pages

    1) -During the Great Recession Wells Fargo targeted black people and convinced them to take out subprime loans. Such actions lead to the result of Wells Fargo being sued in 2010 for discrimination and a year later settling the suit paying more than 174 million. -The early economy was built on slave labor. Not only did slaves build the Capitol building, but they built the White House too.

    Read More

  • Great Depression Dbq

    746 Words  | 3 Pages

    As a result, the weakness of these emerging industries as well as the money placed solely on the automotive and construction industries were not enough to save the economy by the time of the 1929 crash, and lead to America’s Great

    Read More

  • What Are The Similarities Between Great Depression And The Great Recession

    1220 Words  | 5 Pages

    The Presidents during the Great Depression and Great Recession, Franklin Delano Roosevelt and Barack Obama, respectively, resorted to similar actions in order to combat the economic catastrophes. President Roosevelt brought about the New Deal which consisted of programs, economic reforms, and regulations, to alleviate the conditions of Americans. But, at the same time, it was implemented in order to increase the extent to the government’s power and influence. Steve Hanke, an applied economist at Johns Hopkins University, states that similarly, “this type of intrusive response has also followed the Great Recession, ushering in a plethora of government regulations, particularly those that affect banks and financial institutions” (Hanke). Implementing these regulations and reforms requires large spending, so another parallel drawn can be the respective increase in government spending.

    Read More

  • New Deal Dbq

    657 Words  | 3 Pages

    President Franklin D. Roosevelt’s New Deal legislation restored the public’s confidence in the federal government through acts that protected and promoted the general welfare of American. The new direction abandoned the previous administration's laissez-fair style Roosevelt took immediate action after his inauguration signing the Banking Act of 1933. In the wake of the 1929 Stock Market Crash, the Banking Act, aliened with his first goal was to repair the people’s trust in the nation's financial system. Roosevelt described the law passed by Congress as having, “authority to develop a program of rehabilitation of our banking facilities.” The new regulations hinder the reopening of banks based on assessments that ensured only healthy banks would

    Read More

  • Why Was The Federal Reserve Formed?

    1005 Words  | 5 Pages

    The forty-six billion the Fed gave to lenders was two-hundred times more than the daily average. The quick infusion of cash was a far cry from normal Fed operations. On the day of the 9-11 attack, the S&P 500 dropped 4.9% and continued to go down causing markets to crash in less than a weak. The Federal Reserve’s quick and decisive action, however, helped the markets return to normal in just over 19 days. This action helped keep the U.S economy stable and prevent an economic

    Read More

  • Alexander Hamilton's Economic Crisis

    532 Words  | 3 Pages

    With the election of George Washington as the first president, the newly formed republic of the U.S. faced a number of domestic problems. In an attempt to tackle the economic crisis, Secretary of State, Alexander Hamilton, proposed his financial plan which was intended to transform the U.S. into an industrial and commercial power. This plan entailed two reports on public credit, one on the installation of a national bank, and finally a report on manufactures. This report on manufactures encompassed Hamilton 's vision of America 's economic future based on industry and manufacturing as integral components of the emerging American society, which he thought would propel the U.S. to becoming not only a nation equal to Britain and France, but one that was superior on every level.

    Read More

  • Franklin D Roosevelt Rhetorical Analysis Essay

    727 Words  | 3 Pages

    Amidst the troubles of the Great Depression, rumors of bank corruption and closure provoked investors to pull their money out of American banks. Of course, the banks could not keep up, and fueling even more panic and withdrawals. To curb this vicious cycle, president Franklin Delano Roosevelt established an indeterminate bank closure, a “holiday” to allow the banking crisis to stabilize. However, for the plan to work, he needed the support of the American public. And so, in his first “fireside chat,” as journalists would later dub it, Roosevelt reassured the public and informed them of his plan to repair the banking situation.

    Read More

  • Great Depression Dbq

    1347 Words  | 6 Pages

    In 2008, economically, we were on our way to another massive depression. It took two years and the creation of new policies to get us out of this. If it weren’t for the Great Depression, people might not be as careful as they are with money and there would not be any New Deal programs that still have an impact today. The FDIC is very important nowadays because it insures your bank account. If there were to be another heroic depression, you would not lose all of your money that you have in the bank

    Read More

  • What Caused The Great Depression Dbq Research Paper

    556 Words  | 3 Pages

    The Law of Supply and Demand was miscalculate when industries started to overproduce products and let people buy them in installments. They were buying too many products on installments without knowing that their incomes were not expanding as fast as their debts. It was inevitable when they had to reduce their purchases to be able to survive the stock market crash. However, the cutback had a negative impact on the economy because many investors put too much money on the stock market, causing the security price to increase by the “competitive bidding rather than by any fundamental improvement in American business” (Document 5). Since, people have not had the opportunity to pay back their

    Read More

  • DBQ Great Recession

    624 Words  | 3 Pages

    The Great Recession was a period of general economic decline observed by world markets beginning around the end of the first decade of the 21st century. The recession was a result of a financial crisis in 2007 which effected the years to come . The primary source of this problem was that banks were creating too much money. In addition, banks had doubled the amount of money and debt in the economy. Resulting in a financial crisis as the government and banks had failed to constrain the financial system’s creation of private credit and money.

    Read More

  • Henry Hazlitt Economics In One Lesson Analysis

    676 Words  | 3 Pages

    In his book “Economics in One Lesson”, Henry Hazlitt states that economic fallacies are spawned by “the persistent tendency of men to see only the immediate effects of a given policy, or its effects only on a special group, and to neglect to inquire what the long-run effects of that policy will be not only on that special group but on all group; it is the fallacy of overlooking secondary consequences” (1979). Hazlitt continues to say that “The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups” (Hazlitt, 1979). The Federal Reserve is a good example of a system put in place for the

    Read More

  • Recession After The Great Depression: A Case Study

    204 Words  | 1 Pages

    The worst recession since the Great Depression! The recent burst of the 8 trillion dollar house bubble, left the nation in shambles as the business orders are declining drastically- a startling 0.06 percent drop from the previous year. The consumer spending and business investments drying up, is leading to significant loss of jobs which brings into question- Is the government doing anything to stop this recession?

    Read More

  • Lehman Brothers: Financial Fraud In 2008

    2178 Words  | 9 Pages

    Executive Summary Lehman Brothers were an investment bank involved in transactions worth billions of dollars and one of the most powerful investment banks in the world. Lehman Brothers collapsed in 2008 following bad investment in the sub-prime mortgage market and used bad accounting practices called Repo 105 transactions to try and cover up the bad assets. This report sets out the use of the fraud triangle when describing the actions which led to the collapse. The pressure applied on the bank, the opportunity due to the lack of regulation to carry out the actions and the ability of the bank to rationalise their decision making.

    Read More

More about Ben Bernanke's In The Great Recession

Open Document