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The Federal Reserve Response to the Recent Recession

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Submitted By rock1978
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The Federal Reserve Response to the Recent Recession Rahman R. Funn
Webster University
BUSN 5620 [ July 23, 2012 ]
Ms. Lynn Bailey

Abstract

This term paper examines the history of the Federal Reserve System and takes a look at what causes a recession and how the FED responded to the most recent one. A recession can cripple a nation if not handled properly. With this paper, I explain how necessary interest rate cuts, the purchase of bonds and mortgage backed securities, and company bailouts were needed to prevent a second Great Depression. These actions will result in the United States creating low, short term-interest rates (near zero) through 2014. The Federal Reserve Response to the Recent Recession

This paper examines the history of the Federal Reserve (FED) and how they responded to the recent recession. The goal of this paper is to give the reader insight on the history of the Federal Reserve System and how it was formed. The reader will gain knowledge of what a recession is and how the FED responded to the recent one. The data used for this paper consist of a literature review of articles from the internet websites of NY Times, Federal Reserve.

History of the Federal Reserve System (FED) The Federal Reserve System, commonly known as the FED, is the central bank of the United States. Congress established this bank (signed off by President Woodrow Wilson) on December 23, 1913. It was initially created to provide the nation with a safer, more flexible, and more stable monetary and financial system. This was in response to a series of financial panics, particularly the 1907 Bankers Panic. The 1907 Bankers Panic began when two men tried to corner the market on stock from the United Copper Company. When the bid failed, banks that lent them money

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