The Great Recession

The Great Recession — page 1 — Dressed as Robin Hood who famously stole from the rich to give to the poor protesters expressed their frustration with government bailouts of large financial

The Great Recession — page 2 — IN T RODU C T I ON n Thursday September 18 2008 the secretary of the United States Treasury and the chairman of the Federal Reserve walked into the U S Capitol They sat down in the Speaker of the House's office Republicans and Democrats from both the House and the Senate were gathered there Federal Reserve chairman Ben Bernanke told the lawmakers that Congress needed to authorize a massive spending bill Treasury secretary Hank Paulson said matter of factly Unless you act the financial system of this country and the world will melt down in a matter of days Bernanke warned If we don't do this tomorrow we won't have an economy on Monday The lawmakers were stunned into silence They knew these were not empty threats by people inclined to exaggeration They had seen the crises tumbling one after another like bowling pins for months The longest downturn since World War II the Great Recession became a defining moment in the early 21st century For 18 months December 2007 June 2009 the American economy stumbled through losses in trade and production increases in unemployment declines in housing values and one crisis after another in the financial sector The aftershocks soon spread around the globe making a complete recovery even harder to

The Great Recession — page 3 — Ea IT O NJ TI O IN N C1 LF1 B1 ET

The Great Recession — page 4 — TURNING T ZIO CH AP TER ONE SUPPLY R DEMAND n the U S the economy relies on many things People buy products They pay for services Bankers take care of people s money Stock traders invest in the markets And the federal government over everyone Or at least it s supposed to The Federal Reserve was created to be the nation s central bank in 1913 Its job was to stabilize banks around the country by controlling the overall money supply The Fed was not meant to look after private companies The govern ment figured other financial firms could look after themselves In time though financial EEEEB companies grew larger and more powerful than expected Before the Fed was established bank II hy ing panics were common Traditional banks did not necessarily keep enough money on hand to be able to give it back to their cus tomers They invested in the stock market U S Federal Reserve Washington D C The Fed issues new bills and coins each year to replace the damaged and worn money it has pulled out of

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