The past quarter century has held times of economic prosperity and crisis in this country. Because your retirement hinges on your financial options and decisions, the economic health of certain parts of the financial world can dictate if and how you struggle, survive, or thrive in retirement. As such, it’s arguable that no other institution has as much of a direct effect on the financial world—and thus your financial situation—than the Federal Reserve. So, keep reading for a brief history and analysis of Federal Reserve policy to give you some context as to how the financial world got here and where it may be going.
Ben Bernanke: Navigating the Financial Crisis
Tenure: 2006-2014
Monetary Policy: Ben Bernanke’s tenure was defined by the 2008 financial crisis. His approach to addressing this crisis was innovative and aggressive, involving unconventional monetary policies to stabilize the economy. Bernanke implemented measures such as lowering interest rates to near zero and introducing quantitative easing (QE), which was when the Fed bought troubled assets from institutions outright to avoid total collapse. This was meant to inject liquidity into the financial system, preventing a complete economic collapse and stabilizing financial markets.
Reception: Initially, Bernanke faced criticism for not foreseeing the crisis. However, his decisive actions during the crisis were largely praised by economists and policymakers. The markets responded positively to his unconventional measures, which were seen as necessary to prevent a deeper recession. However, many Americans still ended up paying the brunt of the recession while wealthy people and surviving institutions were saved and even thrived. While this avoided total catastrophe, saving billion- and trillion-dollar institutions and not them seemed unfair to the American people. The phenomenon that institutions are more important to save than the American people gave rise to the criticism of a system where some institutions are “too big to fail.”
Janet Yellen: A Focus on Employment and Stability
Tenure: 2014-2018