The Great Recession and beyond
In 2007, the housing market collapsed. Two years later, the Dow Jones industrial average plummeted to its lowest, and unemployment peaked at 10 percent that same year.
To help the hemorrhaging economy, the government bailed out or took over some of the nation's largest financial firms, and presidents George W. Bush and Barack Obama signed stimulus bills to introduce tax cuts, consumer-protection measures and spending programs. The Fed lowered its benchmark interest rate to near zero percent and embarked on a program of quantitative easing, with the last phase entailing the purchase of $85 billion per month in Treasuries and mortgage-backed securities.
Experts differ on whether the Fed's magic is working.
While Carnegie Mellon professor Meltzer says the effectiveness of the Fed's policies currently is "very low," Husson professor Wellington says the policies have been "generally helpful" and Babson professor Edmunds says the Fed made the Great Recession "considerably less severe than it would have been."
As Janet Yellen takes the helm as the next Fed chair, our three experts forecast that she'll maintain the status quo. That's for the next few years, but no one knows what's in store for the next century of the Fed's reign.