The courage to act

In all crises, there are those who act and those who fear to act. The Federal Reserve, born of the now little-known Panic of 1907, failed its first major test in the 1930s. Its leaders and the leaders of other central banks around the world remained passive in the face of ruinous deflation and financial collapse. The result was a global Great Depression, breadlines, and 25 percent unemployment in the United States, and the rise of fascist dictatorships abroad. Seventy-five years later, the Federal Reserve —the institution that I have dedicated the better part of my adult life to studying and serving—confronted similar challenges in the crisis of 2007–2009 and its aftermath.