During the 1980s, many banks failed, imposing large losses on the Bank Insurance Fund (BIF). The Federal Reserve loaned to many of the banks that ultimately failed, an association that convinced many that Federal Reserve lending practices had increased BIF losses.
Many economists believe that the quantity theory of money explains the relationship between money and inflation over long periods of time. In particular, they believe that a permanent increase in the quantity of money will eventually produce an equiproportionate permanent increase in the general level of prices.
As analysts search for explanations for the protracted recovery from the last recession, a great deal of attention has been focused on the "credit view” of monetary policy, which argues that monetary policy affects the economy through the direct effect of policy actions on the supply of depository institutions’ credit.
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