The Treasury Department s Actions - 806 Words

The Treasury Department’s Actions During the largest recession the United States has seen since the great depression, the Treasury Department sprung into action to stave off another depression. Within a short period of time after the housing bubble burst, financial institutions started to fail. Credit and liquidity virtually vanished within days. The government was forced to react quickly to thwart a complete financial collapse. An estimate from the public interest group Better Markets has calculated the cost of the recession close to $12.8 trillion (Puzzanghera, 2012). This number is criticized since it includes losses in economic output, GDP, and bail-outs, while home equity losses and consumer net wealth are not. This figure does give a good idea of the magnitude of the Treasury Department’s actions. A multitude of industries, and companies received direct financial aid. The government identified key economic areas where policies were needed, and provided credit and liquidity for growth in those are as. The quick response of the Treasury Department helped in reducing the negative effects of the financial crisis. The three economic theories that I identified in this financial crisis consist of classical economics, Keynesian economics, and aggregate market (AS-AD) analysis. There was also a fear of monetarism which has not come to fruition at this time. Economic Theories Classical economics is considered one of the original economic theories. It is based on theShow MoreRelatedThe Division Of Foreign Assets Control773 Words   |  4 Pagesâ€Å"The Division of Foreign Assets Control was established in the Office of International Finance by a Treasury Department order in 1950, after People s Republic of China entered the Korean War. 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