Recovering from the Great Recession in the U.S. and Nevada
Recovering from the Great Recession in the U.S. and Nevada
Recovering from the Great Recession in the U.S. and Nevada
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5/23/2011<br />
110%<br />
100%<br />
90%<br />
80%<br />
Spend<strong>in</strong>g as a Share of U.S. GDP<br />
Private Investment Purchases<br />
Trade Deficits<br />
70%<br />
60%<br />
50%<br />
40%<br />
Private Consumption Spend<strong>in</strong>g<br />
30%<br />
20%<br />
Federal Purchases<br />
10%<br />
State <strong>and</strong> Local Government Purchases<br />
0%<br />
1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008<br />
Response #1: Monetary Intervention<br />
Federal Reserve authorized:<br />
• Quantitative eas<strong>in</strong>g: purchase of government bonds, helped<br />
drive yield to zero.<br />
• Purchase of private mortgage-backed securities, central bank<br />
currency swaps, target federal funds rate near zero.<br />
• Push<strong>in</strong>g vs. pull<strong>in</strong>g on a rope. Effectiveness varies.<br />
QE II is currently planned:<br />
• – “Hail Mary pass” – to prevent deflationary expectations.<br />
3
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