Hazar Raporu - Issue 02 - Winter 2012
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10,0<br />
8,0<br />
6,0<br />
4,0<br />
2,0<br />
0,0<br />
-2,0<br />
-4,0<br />
-6,0<br />
-8,0<br />
-10,0<br />
GDP Growth Rate<br />
1990q1<br />
1991q1<br />
1992q1<br />
1993q1<br />
1994q1<br />
1995q1<br />
1996q1<br />
1997q1<br />
1998q1<br />
1999q1<br />
2000q1<br />
2001q1<br />
20<strong>02</strong>q1<br />
2003q1<br />
2004q1<br />
2005q1<br />
2006q1<br />
2007q1<br />
2008q1<br />
2009q1<br />
2010q1<br />
2011q1<br />
<strong>2012</strong>q1<br />
and the monetary policy applied by the<br />
FED have significantly helped to the<br />
recovery of the economy. First of all, FED<br />
initiated a large monetary expansion right<br />
after the collapse of Lehman Brothers in<br />
September 2008. For instance, the size<br />
of FED’s balance sheet was around $950<br />
billion when Lehman Brothers collapsed<br />
and it now reached to almost $3 trillion.<br />
Although initially this rapid monetary<br />
expansion did not have a significant effect<br />
3500000<br />
3000000<br />
2500000<br />
2000000<br />
1500000<br />
1000000<br />
500000<br />
0<br />
FED's Balance Sheet Size<br />
2008-01-<strong>02</strong><br />
2008-03-26<br />
2008-06-18<br />
2008-09-10<br />
2008-12-03<br />
2009-<strong>02</strong>-25<br />
2009-05-20<br />
2009-08-12<br />
2009-11-04<br />
2010-01-27<br />
2010-04-21<br />
2010-07-14<br />
2010-10-06<br />
2010-12-29<br />
2011-03-23<br />
2011-06-15<br />
2011-09-07<br />
2011-11-30<br />
<strong>2012</strong>-<strong>02</strong>-22<br />
<strong>2012</strong>-05-16<br />
<strong>2012</strong>-08-08<br />
<strong>2012</strong>-10-31<br />
on economic growth, it significantly<br />
helped to the recovery of private banks’<br />
balance sheets that have been damaged<br />
due to the losses in mortgage backed<br />
securities. As Fed was trying to stimulate<br />
the economy through monetary policy,<br />
Obama supported these<br />
efforts by an expansionary<br />
fiscal policy. A $787 billion<br />
economic stimulus package<br />
was put in place in order<br />
to create more jobs for the<br />
economy and speed up the<br />
economic recovery. The<br />
package included increased<br />
expenditure in various<br />
areas such as infrastructure,<br />
education, health and energy and also<br />
important tax incentives that will stimulate<br />
consumption spending. As a result of all<br />
these policies after a negative economic<br />
growth for four consecutive quarters, the<br />
economy started to grow again in the third<br />
quarter of 2009. However, all these efforts<br />
that have been shown to take the economy<br />
out of recession have considerably<br />
damaged the fiscal balances in US.<br />
Declining tax revenues due<br />
to the economic slowdown<br />
and increased expenditures<br />
to stimulate economic<br />
growth have significantly<br />
increased the budget<br />
deficit during this period.<br />
In 2009 and 2010 the ratio<br />
of budget deficit to GDP<br />
has reached to doubledigit<br />
levels and in 2011<br />
the ratio of total federal<br />
debt to GDP has increased<br />
to 100%. In fact, in the summer of<br />
2011 the US has reached to its debt<br />
ceiling and due to the disagreement in<br />
the Congress between Democrats and<br />
Republicans the country has come to<br />
CASPIAN REPORT<br />
123 121
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