The paradigmatic change that has led the Fed to test unchartered waters.
On 15 September 2008, Lehman Brothers, the fourth largest bank in the United States, filed for Chapter 11 bankruptcy. Lehman had collapsed.
A few months later, Barack Obama became the first US president of African-American descent – one sea change after another. Yet beyond these events, there was another, even more crucial change taking place in terms of monetary policy. Ben Bernanke’s Federal Reserve decided to begin a process that, seven years on, has not yet reached completion. He introduced the age of the zero interest-rate policy (ZIRP), which is likely to continue for some time yet.
Conspiracies and the aid quickly supplied to bankers were not the cause of the sub-prime mortgage crisis, as a number of opinion leaders have claimed and people have alleged on social media for years. In 2008, the US financial system, packed as it was with highrisk securities that were impossible to price, faced serious stability problems and was close to being irredeemable. Today, those risks have been transformed and have changed location but haven’t been removed entirely.
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The paradigmatic change that has led the Fed to test unchartered waters.
On 15 September 2008, Lehman Brothers, the fourth largest bank in the United States, filed for Chapter 11 bankruptcy. Lehman had collapsed.
