Annotated Bibliography

Ackerman, A. (2021, November 8). Fed says U.S. public health among biggest near-term risks to
financial system. The Wall Street Journal. Retrieved November 15, 2021, from
https://www.wsj.com/articles/fed-says-u-s-public-health-among-biggest-near-term-risks-to-
financial-system-11636405657.

This source is a Wall Street Journal article from November 9 that discusses how national public
health is one of the biggest short-term risks to the financial system. There has recently been a
disruption in supply chain systems, and the resurgence of the delta variant has led to a slowdown
in hiring, more businesses closing, and hinderance in economic growth. Banks are currently
well-capitalized, but the housing market has seen high valuations, which could be sensitive to
potential shocks. Current vulnerabilities in MMMFs, bonds, and bank loan mutual funds could
amplify shocks as well. This article is crucial because it gives a lot of insight on how the housing
credit market collapsed in 2007-2009 and how it compares to the current economic recession due
to COVID. Regulations imposed from 2008 allowed banks to be well-capitalized and better
equipped for COVID; on top of government aid, the average American household was in better
financial shape. The background information on the 2007-2009 financial crisis is pertinent to
understanding federal reserve policies nowadays to possibly activate countercyclical capital
buffers to further assist the economy during this uncertain time. The strength of this article is that
it gives insight on historical events that can be applied to the current situation, but a weakness is
that it is not too descriptive with basic information. It is not the best article for someone who
does not have a prior understanding of banking and financial markets.

Cheng, J., Powell, T., Skidmore, D., & Wessel, D. (2021, June 3). What's the Fed doing in
response to the COVID-19 crisis? what more could it do? Brookings. Retrieved November 14,
2021, from https://www.brookings.edu/research/fed-response-to-covid19/.

This website from the Brookings Research discusses many options the Fed is currently doing to
support the US economy and financial markets in light of the COVID-19 pandemic. Main
methods include bringing the federal funds rate down to nearly 0% to lower the cost of
borrowing on mortgages and loans, purchasing $500 billion in Treasury securities and $200
billion in government mortgage-backed securities, expanding repo operations, and lots of
operations to encourage banks to lend more. These steps that the Fed takes are critical to the
economy’s health because they will ensure that credit will continue to flow to businesses and
households, and that another financial shock would not happen. This website gives a lot of
background information on what the federal reserve did in response to COVID-19. A strength of
this source is that everything on here is very detailed and it lists a multitude of options the federal
reserve can take to help the economy. A bias in this article is that it lists potential options the Fed
can take to further economic development but these are professional opinions and suggestions
that lean a particular view or another.

Clarida, R. H., Duygan-Bump, B., & Scotti, C. (2021). The COVID-19 crisis and the
Federal Reserve's policy response. Finance and Economics Discussion Series, 2021(034), 1–23.
https://doi.org/10.17016/feds.2021.035
In this paper, researchers argue that the federal reserve took appropriate measures to provide
critical support for the economy and are continuing to do the best for a robust economic recovery
in 2021. The pandemic led to an unprecedented fiscal and monetary policy response, and about
28% of the USA’s GDP was used to provide for fiscal support. This report states that the Fed’s
policy actions can be grouped into four broad categories: conventional monetary policy
measures, liquidity and money market function measures, facility launches, and temporary
regulations and recalibrations to incentivize banks to support economic credit flows. This paper
reviews all of these four categories of measures and assesses how well the Fed performed at each
of them. This report is distinctive in exploring the significance of the types of actions the federal
reserve took to benefit the economy and is a scholarly article written for advanced research.
There is some degree of bias here; even though this paper is written by doctoral professionals,
there is an argumentative claim that the federal reserve took appropriate measures and it leans in
favor of the fed, but that might not be the view of the general public.

Stagman, A. (2021, November 15). The Fed tapering: What does it mean? Inside Indiana
Business. Retrieved November 15, 2021, from
https://www.insideindianabusiness.com/articles/the-fed-tapering-what-does-it-mean.

On November 3rd, Federal Reserve Chair Jerome Powell announced that the Fed would begin the
economic rollback process in the form of tapering. When the Fed chooses to taper, it means that
it will begin to decrease the amount of asset purchases each month. The two primary ways of
stimulating the economy include lowering the Federal Funds Rate and making large-scale asset
purchases designed to lower short and long-term interest rates so the cost of borrowing money is
lower for the public; this is based on the idea that cheaper money will stimulate spending and
improve the economy. Quantitative easing is done by purchasing long-term securities like bonds
and fixed income securities, and this will cause longer-term interest rates to decrease and build
confidence in the markets and improve liquidity. Nowadays, officials at the Fed believe that the
economy is starting to rebound enough to a point where it should taper and reduce bond
purchases by $15 billion each month. Currently the market has had a favorable reaction to
tapering, but they still need to remain observant to prevent tapering panics, which occur when
people panic and begin selling off in the stock market due to taper announcements. As an
investor, it is important to prepare for volatility and uncertainty in the future. This article helps
explain a lot of the main actions the Federal Reserve takes and implications in a very intuitive
manner that is easy to understand.

Wade et al., (2021, November 5). Timeline: The Federal Reserve responds to the threat of
coronavirus. AAF. Retrieved November 15, 2021, from
https://www.americanactionforum.org/insight/timeline-the-federal-reserve-responds-to-the-
threat-of-coronavirus/.

This website from the American Action forum details the timeline of the Federal Reserve’s
response to the coronavirus pandemic. Starting from March 15, 2020, the Fed employed
emergency powers to impose new monetary policy; among these include cutting interest rates to
near-zero and a $700 billion round of quantitative easing. During quantitative easing procedures,
the Fed will purchase large-scale assets (government bonds and long-term securities) as an
attempt to add liquidity to the market. Despite these actions, people are still concerned as to
whether enough liquidity has been injected into the market to prevent further financial shocks.
On November 3, 2021, the Fed announced that it will begin to pull back on economic support by
reducing asset purchases via quantitative easing. Before then, it was purchasing $120 billion in
assets per month, but now it hopes to ease up on this to prevent inflation rates from getting too
high. This website puts into perspective the timeframe of fiscal and monetary policy carried out
by the Fed and lists it in an navigable timeline. A weakness of this article is that the vast majority
of events on the timeline are from 2020, and there is only one event from 2021. It would be more
beneficial for timely purposes if they featured more actions the Federal Reserve has been taking
since 2021 along with actions from 2020. Either way, it offers a substantial amount of
information for actions the fed took during 2020.

Stagman, A. (2021, November 15). The Fed tapering: What does it mean? Inside Indiana
Business. Retrieved November 15, 2021, from
https://www.insideindianabusiness.com/articles/the-fed-tapering-what-does-it-mean.

On November 3rd, Federal Reserve Chair Jerome Powell announced that the Fed would begin the
economic rollback process in the form of tapering. When the Fed chooses to taper, it means that
it will begin to decrease the amount of asset purchases each month. The two primary ways of
stimulating the economy include lowering the Federal Funds Rate and making large-scale asset
purchases designed to lower short and long-term interest rates so the cost of borrowing money is
lower for the public; this is based on the idea that cheaper money will stimulate spending and
improve the economy. Quantitative easing is done by purchasing long-term securities like bonds
and fixed income securities, and this will cause longer-term interest rates to decrease and build
confidence in the markets and improve liquidity. Nowadays, officials at the Fed believe that the
economy is starting to rebound enough to a point where it should taper and reduce bond
purchases by $15 billion each month. Currently the market has had a favorable reaction to
tapering, but they still need to remain observant to prevent tapering panics, which occur when
people panic and begin selling off in the stock market due to taper announcements. As an
investor, it is important to prepare for volatility and uncertainty in the future. This article helps
explain a lot of the main actions the Federal Reserve takes and implications in a very intuitive
manner that is easy to understand.

This website from Deloitte, one of the top 4 accounting and financial service firms, discusses
how cryptocurrency has become a hot topic in the business world. Over 2,300 US businesses
now accept Bitcoin, and crypto has become a worldwide host of opportunities and challenges.
Firms venturing into cryptocurrency must have a clear understanding of it. Crypto is known to
enable real-time simple and secure money transfers without using physical cash, and due to the
fact it is all encrypted, it is highly secure but also, transactions are impossible to undo or keep
track of.