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AN HISTORICAL PERSPECTIVE ON THE CRISIS OF 2007 – 2008

AN HISTORICAL PERSPECTIVE ON THE CRISIS OF 2007 – 2008. BY: MICHAEL D. BORDO DEPARTMENT OF ECONOMICS RUTGERS UNIVERSITY. OUTLINE. Explain Financial Crisis of 2007 – 2008 Compare and Contrast Crisis with other past occurrences Combating Future Crises.

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AN HISTORICAL PERSPECTIVE ON THE CRISIS OF 2007 – 2008

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  1. AN HISTORICAL PERSPECTIVE ON THE CRISIS OF 2007 – 2008 BY: MICHAEL D. BORDO DEPARTMENT OF ECONOMICS RUTGERS UNIVERSITY

  2. OUTLINE Explain Financial Crisis of 2007 – 2008 Compare and Contrast Crisis with other past occurrences Combating Future Crises

  3. Similarities with Past Economic Crises: In the past we have seen: Bust & Recession Tightening in Policy Financial Innovation Leverage Bubbles created because of: Asset prices Increase From loss of Fundamentals to value assets

  4. What makes this Crisis Unique?

  5. Combating Future Issues: • Fed developed series of new programs which would provide liquidity in times of need • These would only benefit firms having severe solvency issues and that would have an extremely harmful tole on the economy if they were to fail • This is contrasts the previous way of helping firms by Buying Treasury Securities • 2. They also plan to act with greater speed in regards to monetary policy decisions. • Michael Bordo (author) suggested that they provided excess amounts of liquidity in the market in 2001 – 2004 and that this was also an issue. • So do not utilize liquidity measures for to extensive a period

  6. Questions?

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