1. Economic Crisis Monetary Theory and Policy March 28, 2009

2. Economy Today Press Release (03/23/09) - The Role of the Federal Reserve in Preserving Financial and Monetary Stability Joint Statement by the Department of the Treasury and the Federal Reserve Sound economic performance requires both financial stability and monetary stability. As the nation's central bank, the Federal Reserve has critical responsibilities in both areas. The Congress created the Federal Reserve in 1913 in large part in response to the periodic panics and crises that plagued the U.S. financial system in the 19th and early 20th centuries. http://www.federalreserve.gov/newsevents/press/m onetary/20090323b.htm

3. Guarantee Program http://www.treasury.gov/offices/domestic-finance/key-initiatives/money-market-fund.shtml The U.S. Treasury Department has established a Temporary Guarantee Program for Money Market Funds. Under this program, the U.S. Treasury will guarantee to investors that they will receive $1 for each money market fund share held as of close of business on September 19, 2008.

4. TARP (TALF) http://www.treasury.gov/initiatives/eesa/ Term Asset-Backed Securities Loan Facility: Terms and Conditions (TALF) The TALF is intended to make credit available to consumers and businesses on more favorable terms by facilitating the issuance of asset-backed securities (ABS) and improving the market conditions for ABS more generally. Term Asset-Backed Securities Loan Facility: Terms and Conditions 1

5. Money Supply

6. Credit Market

7. Inflation

8. Discussion Why do you think the Federal Reserve and Department of the Treasury sought to clarify the central bank’s role? Why some policymakers are concerned that the central bank may have exceeded its mandate with its TARP and other emergency initiatives? What monetary policy actions may be required later by the Fed to help protect purchase power?