The Federal Reserve in the face of the crisis and its effects on the global financial system

Abstract

This article analyzes the crisis resolution mechanisms undertaken by the Federal Reserve as a response to the financial crisis that began in the United States in 2007. The principle argument set forth is that the Fed’s actions more closely resemble a back door bailout for banks deemed “too big to fail” than misguided monetary policy, as many critics within the United States contend. The Fed’s unstated bailout has created not only a range of economic problems both in the United States and in much of the rest of the world, but has also increased inequality and lowered standards of living for already vulnerable populations.