Beleidsreacties

As the two-thousand-eight financial crisis deepened, the Fed used expansionary monetary policies, and the U.S. government used expansionary fiscal policies to support the economy.

The Fed first used its traditional tool, which is lowering the federal funds rate. This rate was reduced to nearly zero. This made loans cheaper and aimed to encourage people and businesses to spend money.

When that wasn't enough, the Fed used an uncommon tool called Quantitative Easing (QE). This meant the Fed bought large quantities of long-term bonds to lower long-term interest rates, which encouraged borrowing and spending.

The government also stepped in. It introduced the U.S. Treasury’s Troubled Asset Relief Program (TARP). One way this program helped was that the government, acting through the Treasury, provided funds to banks. Banks could then use these funds for lending. The government temporarily became a part-owner of these banks.

The American Recovery and Reinvestment Act of 2009 was a stimulus package. It included measures such as extended unemployment benefits and infrastructure projects, among other things, to help the economy.

These policies worked together to support the economy.