Government's Trial and Error Helped Stem Financial Panic - The Economy Article - interest rates, federal reserve, banks

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Government's Trial and Error Helped Stem Financial Panic

Article Submitted by: ktexas
The Economy

Tags: Interest rates, Federal reserve, Banks, Recession, Treasury, Money market funds, Great depression, Financial crisis, Fiscal policy, Monetary policy.

With a modicum of hindsight now available, do governments and central banks deserve credit for preventing catastrophe? The early verdict from most scholars, executives and government insiders is yes.

On the question of which of dozens of extraordinary interventions -- rock-bottom interest rates, surging government spending, billions of taxpayer dollars injected into banks, sweeping government guarantees -- made the biggest difference, there's less agreement.

In my opinion, the actions of the federal government that gave the most bang for the buck were those that were intended to prevent panic and fear. A good example was the money market fund guarantee program. It helped ease worries of investors, and according to news reports, it actually made money for the government.

Submitted: Sep 15, 2009 Views: 197 Comments: 0 Likes: 1

View Article: http://online.wsj.com/article/SB125288495316307191.html

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