Lehman Brothers went bankrupt, AIG had to be bailed out for billions and now WaMu might be sold. Shit's getting really bad. Best to know your lingo so you can understand why you might start seeing bread lines and soup kitchens set up all over town. Ok, maybe it won't be THAT bad but this is no joke. Even if the stock market doesn't crash, it will probably get worse and things won't heal for a long, long time. Let's start with:
The Fed (Or, The Federal Reserve Bank)
This is not a government sector, office or national bank per say and up until recently I have always thought so. The system was designed out of a compromise between the competing philosophies of privatization and government regulation.While planning the design of the system, some people wanted the system to have generally private aspects whereas others wanted more government involvement. The system that resulted ended up being a compromise between these two philosophies. In the current system, private banks are for-profit businesses but there are restrictions on what they can do. These restrictions placed on private banks are government regulations. The Federal Reserve System is the part of government that regulates the private banks. The balance between privatization and government involvement is also seen in the structure of the system. Private banks elect members of the board of directors at their regional Federal Reserve Bank while the members of the Board of Governors are selected by the President of The United States and confirmed by the Senate. The private banks give input to the government officials about their economic situation and these government officials use this input in Federal Reserve policy decisions. In the end, private banking businesses are able to freely run a profitable business while the U.S. government, through the Federal Reserve System, oversees and regulates the activities of the private banks. Great. Wish it worked. Check out the scary chart below....
Market Crash 1929, 1990, 2000 - 2008
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