Background of Global Financial Crisis; What is it about? It all started with the dream of all Americans, that every American should have a home. Regardless of who you are and what you do, if you are American, you should have something called home. The real estate sector was booming and financial agents thought there was no better time to make loans. The household sector received a boost from the increase in money supply by commercial finance companies, and people were granted loans regardless of the credit rating they received. He never expected the real estate boom to end so abruptly and prices to hit historic lows. Being a capitalist-driven economy, the US economy did not bother to indulge in the policies pursued by the then prominent financial giants. Gradually these financial giants in this sector started to feel the heat as “subprime” customers started to be unable to repay the loans. The properties mortgaged by the clients did not even cover the principal amount of the loan, let alone the interest commitments. Credit offered to people indiscriminately, meeting short-term goals and ignoring warnings from leading economists about the long-term sustainability of the policy, has completely backfired and companies like Lehmann Brothers, Merill Lynch, Freddie Mac and the “bad assets ” by Fannie Mae have reached magnanimous proportions. There was a severe credit shortage in the economy and at the same time negative effects started to occur. The credit crunch caused interest rates on loans to rise in the market, companies to slow down their investment policies, production to decrease, layoffs to increase, consumption to decrease, and the entire economy to follow the downward spiral. The U.S. unemployment rate hit an all-time high of 6.1% and industrial growth posted its biggest decline in three years, falling to 1.1%. US governments realized the severity of the situation and began using monetary and fiscal policies to control the contraction of the economy. Fiscal policy provided impetus in the sense that around $1 trillion was pumped into the economy to boost the liquidity scenario. Financial companies that declared bankruptcy were nationalized, or their non-performing assets were accounted for by the government. The Federal Bank of the United States has also lowered monetary policy rates, such as the Statutory Liquidity Ratio (SLR), relating to the amount of money that commercial banks must deposit at the federal bank, in order to have control over the very high interest rates. interest.