Tom Hoenig and the $600 Billion Bailout
In 2008, the U.S. fell into the worst recession in decades and the Federal Reserve and the Federal Open Market Committee immediately began work to address the economic issues facing the nation. The unemployment rate rose above 10 percent during this period. To this end, the Fed pursued a monetary policy of purchasing government securities that is referred to as quantitative easing. This case was developed to bring the reality of the 2008-2010 recession and the Fed’s monetary decisions into the classroom.
- Assess the most serious economic challenges of the “Great Recession.”
- Develop and defend an opinion of whether TARP stimulated the economy.
- Evaluate Tom Hoenig’s position that easy monetary policy always leads to higher inflation rates.
Application: This case will be especially applicable for Intermediate Macroeconomic classes, Money and Banking classes, and some MBA classes.