The measures taken by Fed were effective in ending the recession in the economy and stimulating recovery in a timely fashion. The economy had almost reached the potential level, and the unemployment rate had reached its natural rate, forcing the economy to recover from the recession. In addition, when the Fed purchased mortgage in the housing market, backed securities led to increased liquidity, and no transactions were taking place.

The 2008 financial crisis in the US forced the fed to adopt certain measures from time to time to protect the economy from falling into a deep recession. The purchasing of these securities as part of the quantitative easing method adopted by the Fed to increase the supply of money in the economy and reduce mortgage interest rates.

Inflation might increase when the money supply increase. For example, inflation was meager during the recession; an increase in the level of money supply led to an increase in the price level from negative to positive zone. Thus, inflation occurred within the feds target. Deflation is the general decline in prices for goods and services indicated by an inflation rate that falls below zero percent. Deflation typically occurs when too many goods are available, or there isn't enough money circulating to purchase those goods. Central banks usually stop deflation as soon as it starts because it can lead to an economic recession.

The savings glut topic relates to deflation, expecting that goods will be cheaper in the future. This means they are not buying or investing, which saves them money that impacts the stability of the inflation rate.

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