History reveals that financial crisis in USA were due to the start of great depression. Many banks were closed due to these circumstances. Main factor behind it was to reorganize the USA Federal Reserve System. Actually the efforts were made to strength its own Banking system rather than commercial banking system. Powers were given to Board of Governors to control the banking system and separation of commercial banking was mandatory in such circumstances.
Many changes were noticed as the use of the external currency was increased. The inflation reached to 20% at the end of 1979 beginning of 1980. To fight against the inflation it was necessary to drive down the inflation rate. They were succeeded to drive down the inflation rate to 4 to 5 % but unemployment rate raised to 10%. Once time again the USA economy was collapsed due to awful management of the FED.
Due to the above crises USA oil industry was affected and oil prices gained increase. Again management did not take serious decisions to boost the economy rather its head made loss to this wealth. As the OPEC got the control of the Oil and gas the USA oil industry went in the hands of four giant companies, these companies took the oil prices to the OPEC level. FED made again mistake that shacked the USA economy and this time borrowers could not cope with high energy prices. We must think about the policies of FED which damaged the USA economy in 2000 due to that FFTTE is still occurring.
Critics are demanding to identify and settle the issue concerning the FFTTE that caused the financial fiasco in 2008. There are many root cause of this financial disaster. These causes are rectified by the implementing the financial policy in control of the honest and motive people. The central point of this paper is the inflation rate. This inflation rate can be controlled by the alternative solution of the better management. If new management thinks that legislation is required then it must be formulated in order to achieve the desired results.