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It is also worth noting that the Fed must understand how the relationship between its actions and the outcomes changes under different circumstances. For example, open market transactions put more money into the economy; they do not imply that spending will increase. Thus, more money in the economy will not necessarily lead to more growth, lower unemployment or higher inflation, even though the typical relationship is that they will.
The third part of the Fed's mandate is with respect to unemployment. The Fed notes that the central tendency of the unemployment rate in the U.S. is between 5.2% and 6.0%. This is basically the target range that the Fed has for unemployment The Fed only has the ability to influence employment. The employment issue is fairly complex, and there are a number of different variables. Monetary policy instruments are somewhat minor variables compared with some fiscal and trade policy instruments,…… [Read More]
The new government banks put heavy taxes on state banks, and they were forced to go under. After this, the government had a monopoly on banking and money again, and they used it to the fullest extent possible. One of the main problems with the banking system, though, was that there were still a lot of cash flow problems and other weaknesses that led to panics for individuals who were holding onto bank notes (Wells, 1987). There were many restrictions placed on new banks, and they could do virtually nothing. This was very frustrating for them, and they were not able to do anything that actually worked to help the economy in any way. Part of this came from a lack of branching out, but most was related to the strict control that was held over them.
Allowing the branching out of banks would have made things run more smoothly,…… [Read More]
During most of the last 20 years (from August 1987 to January 2006), the Fed was headed by Alan Greenspan whose personal economic philosophy to a large extent guided the Fed's actions. One of the features of the Federal eserve's "accommodative" policies was encouraging low interest rates, which was partly responsible for the longest period of economic expansion in U.S. history in the 1990s.
Assessment of the Efficacy of the Fed's Actions
The impact of all actions by the Fed during the last 20 years has not been without controversy. Encouraging of historic low interest rates and increased liquidity during much of the nineties, while contributing to a "feel good" wealth factor, has also been responsible for an unprecedented "housing bubble" in the U.S. that is currently threatening to burst. The Fed's over-enthusiastic support of the Bush administration's tax-cut policies has also contributed to the biggest current accounts deficit in…… [Read More]
The 12 Federal eserve Banks are the private sector check and balance to the Federal eserve. They have three primary roles: 1) To Establish and implement sound monetary policy, 2) To provide a number of financial services to banks (hence the term, Banker's bank -- loans, clearing house, etc.), and 3) The supervision of banks or bank holding companies (companies who own several banks). This system keeps the nation's banks in check for following rules, not discriminating in lending practices, and having enough resources to service its depositors. The Open Market Committee is the Fed's actual arm of decision making -- recommending what to do with the supply of money, interest rates, and the manner in which it lends money to banks, which translates down to the interest banks charge the consumer.
The Fed gets information from government sources, outside economic think thanks, and its own boards. The Fed, too,…… [Read More]
There are three purposes of money: to act as a medium of exchange; as a store of value and as a unit of account (Helfield, 2011). Money as a medium of trade facilitates exchange, in that the counterparties are able to trade money for goods, instead of trading goods for goods, which is more complicated. As a store of value, money does not deteriorate (save via inflation), which is not the case with perishable goods. Money is a unit of account, meaning that money has a readily understood value -- we all know what a dollar is, and this makes it easier to track the amount of money one has or the value of something.
A central bank manages a country's monetary system by managing the amount of money in the system. A central bank can do this in a number of different ways, known as monetary policy…… [Read More]
What are areas of comparative advantage of the United States and its trading partner? What are the benefits and disadvantages specific to this free trade agreement?
The country that was selected which has a trading agreement with the United States is Mexico. The biggest advantages that this is providing to everyone are: increased exports. According to the Office of the U.S. Trade epresentative, this is resulting in a sharp rise in sales for the following products including: vehicle parts ($56.7 billion), machinery ($63.3 billion), electrical machinery ($56.2 billion) mineral fuel / oil ($26.7 billion), plastics ($22.6 billion), grains ($2.2 million), red meats ($2.7 billion), fruits ($1.9 billion), vegetables ($1.8 billion) and private commercial services ($63.8 billion). These areas are offering competitive advantages for both countries. This is because they are reducing the costs that consumers have to pay for a host of products and services. ("North American Free Trade Agreement,"…… [Read More]
Federal Reserve Board
The First District (Boston) economy shows few signs of improvement. Retailers cite disappointing December (2002) results, although some gained in January and February (2003). Most manufacturing contacts report weak demand for goods. Commercial real estate markets in New England remain very slow - no one wants to buy. Most software and information technology providers report that demand is declining. The outlook for Boston is highly uncertain and virtually no contacts are making plans based on expectations of an upturn.
Conditions in the travel and tourism sector in the First District seem to remain weak; contacts report hotel occupancy rates in the Boston area remain low because of light corporate and international travel.
Those in the insurance industry report prosperous financial results, in combination with continuing rate increases for the last quarter of 2002. Companies in the property and casualty arena continue to purport high demand…… [Read More]
Validity and reliability have not been addressed in this paper at all. There is no empirical test being proposed for the paper. The a priori conclusion of the paper, in the absence of research, begs serious questions about the validity of this research. If you think you already know the answer, why ask the question?
In terms of style, the proposal sounds disjointed, and the giant paragraphs do not help. Ideas are somewhat developed, however. There are some minor grammar/spelling errors, such as capitalizing 'gold standard' and 'fiat money.' Slang phrases like "blown away" should be avoided. Avoid first person if possible. Citations need to be improved dramatically, using proper APA style. The lack of proofreading is apparent. The style needs to be tighter as well, to improve professionalism. Stick to the facts.
There are not nearly enough citations in the body of the work. Use APA style…… [Read More]
Federal eserve Tools
The Federal eserve has certain actions it implements to help in the promotion of national economic goals and to influence the overall availability of money (Board of Governors of the Federal eserve System, 2012). These actions make up what is known as monetary policy, which consists of three tools that the Federal eserve uses to influence the economy with aims of pulling the economy out of recession. During a financial crisis such as that experienced in the United States in 2007-2008, The Federal eserve was the only official body that had the power to make a real difference (Cecchetti, 2009). These three tools include open market operations, the discount rate, and reserve requirements (Board of Governors of the Federal eserve System, 2012).
The main tool used by the Federal eserve to influence monetary policy is open market operations. This tool entails the purchases and sales of federal…… [Read More]
Federal eserve in stabilizing the economy using monetary policy tools. The paper is divided into six major sections. The first section introduces the Federal eserve by highlighting its objectives, roles, and composition. The second section explains its role and effectiveness in stabilizing the current U.S. economy. The next section discusses some important economic indicators which the Federal eserve can analyze for better economic stabilization. The fourth section is dedicated for a brief discussion on different monetary policies which the Federal eserve can use to influence the money supply in the country. The final two sections explain the strengths and weaknesses of monetary policy as compared to fiscal policy and its effect on the aggregate demand and supply model.
Introduction: The Federal eserve
The Federal eserve System is the central bank of the United States of America. It is also called as Federal eserve or simply as Fed. It is the…… [Read More]
What tools are used by the Federal Reserve to implement monetary policy?
Monetary policy refers to the actions undertaken by the Federal Reserve, which is the central bank, to control credit and its flow within the United States economy. Significantly, what occurs with money and credit influences interest rates and also the performance of the nation’s economy as a whole (Federal Reserve Education, n.d).
The Federal Reserve presently utilizes numerous tools in the implementation of monetary policy about its statutory obligation to nurture maximum employment and stability in prices. The following are the tools:
1. Open market operations (OMO)
The Fed carries out OMO in domestic markets. The terminology open market implies that the Federal Reserve does not decide on its own concerning the kind of securities dealers it will carry out business with on a certain day. Instead, this choice emanates from an open market whereby the different securities…… [Read More]
Case Assignment: Banking Industry and Regulation: To Regulate or Not to Regulate?
In order to be effective, regulation must focus on issues that make a difference. For instance, a school might regulate the use of the drinking fountain—but if it has a drug problem, no amount of drinking fountain regulation is going to make one ounce of difference in curbing drug use by students. The same analogy can be applied to the banking industry in the U.S. The U.S. has a central banking problem—i.e., it has given over its natural sovereign right to coin its own currency to a group of bankers, who print money when and lend it to the government at interest. This practice effectively places the Federal Reserve in a sovereign position, since it wields a sovereign power, recognized for centuries—millennia even—throughout all history all over the world. Why this transfer of power was approved by…… [Read More]
The Federal Reserve
-What is the mission, or goals, of the Fed?
The Fed concerns itself with the enhancement of “the stability, integrity, and efficiency of the nation’s monetary, financial, and payment systems so as to promote optimal macroeconomic performance” (Federal Reserve, 2018).
-Explain the structure of the Fed and the hierarchy of governance.
The Federal Reserve entities charged with decision making regarding the nation’s economic stability are; the Federal Reserve Board of Governors, The Federal Reserve Banks, and the Federal Open Market Committee (Federal Reserve, 2018). The Federal Reserve System is overseen by Congress.
-Is the Fed a public or private entity? Who owns the Fed?
The fed is a public entity. The Fed is an independent institution, and is not owned by any specific person/entity. It is overseen by Congress.
-If issuing Federal Reserve Notes stimulates the economy, why not print money indefinitely?
Printing money indefinitely would not…… [Read More]
Federal eserve Board is the most powerful financial institution in the country and is actually the Central bank of United States. This institution is responsible for regulating financial system of the country by formulating monetary policies and by changing the fund rates. The Fed is not completely independent and works together with the administration and the Department of the Treasury. It is responsible for formulating and implementing monetary policies in the United States. Even though not independent Federal eserve has the power to single-handedly introduce appropriate regulations and changes in order to control the financial markets. Federal Bank is commonly referred to as the Fed and it has lately been in the news quite consistently and persistently. The headline-making monetary measures have made the public take notice of the way monetary system works in the United States.
USA Business in its (1995) issue wrote, "The Fed exercises control over money…… [Read More]
The key information in the January 14, 2004 Federal eserve summary ranged from mildly encouraging to 'no change' as far as the economy was concerned. Virtually all areas were experiencing small amounts of employment growth, although there were pockets of decline as well. ("Beige Book," January 14, 2004)
In fact, retail sales were up a small amount, mainly because upscale retail stores were having a good season, although the lower end of the market was faring less well. ("Beige Book," January 14, 2004)
Layoffs and flat wages were a big part of the employment picture. The "Beige Book" reported:
Louis reported layoffs in the biotechnology, food, and tobacco industries. Petrochemical producers suffered from overcapacity in the Dallas district and continued to lay off workers in the Atlanta district. In addition, producers of paper goods in the Boston and Philadelphia districts reported some weakness. (January 14, 2004)
Housing starts…… [Read More]
ather than propping up "bad blood" and allowing the "illusion" of wealth to continue to be fostered, the Federal eserve should allow the market to flush out the "bad blood" and operate the way it is intended.
In conclusion, the good that the Federal eserve does is to monitor economic policy, encourage maximum employment and long-term stability. The way it does so, however, especially in times of crisis such as the world is currently experiencing is highly criticized by economists who do not support managerial decisions made by Bernanke and others. As on Paul states, the Federal eserve could better itself by putting an end to fractional reserve banking and allowing institutions, which are filled with bad debt, to collapse rather than continuing to prop them up at taxpayers' expense. Doing so only helps bring down the value of the dollar, which it is supposed to protect.
eference List…… [Read More]
Federal eserve Operations in the United States
Functions of the Federal System in Control of Money Supply
The discount rate, according to the federal system, is the interest rate, which the Federal eserve imposes on the loans it gives to Federal Banks that are troubled and need financial support. Processing of lending to the banks is done through the 'discount window', which in most cases is controlled by the eserve Banks.
Factors influencing Federal eserve to adjust discount rates
Discount rates provided by the Federal eserve to the borrowing banks is in most cases used as tools in controlling the amount of money supply in the country's economy (Wiedemer & Baker, 2012). Currently, the Federal eserve (Fed), uses the discount rate strategy widely and frequently, because of the nature of the tool, which is simple to implement and convenient for the public. In most cases, two factors will lead to…… [Read More]
Federal Reserve Policies 2000-
The first decade of the 21st century saw the U.S. economy on a peripatetic through tumultuous events, euphoric highs, and abysmal lows. The ten-year window highlighted three periods: 2000-2004, 2004-2007, and 2007-2010 in which the Federal Reserve actively utilized their policy levers to achieve their dual policy mandate of full employment and low inflation. The Fed's policy bag includes: the Fed funds rate, open market operations, discount rate, reserve requirements, and margin rates all of which were utilized during these three periods to achieve the ostensible goals of Fed policy. t is worth noting that in each of the three periods the Fed responded to economic conditions which they perceived to be harbingers of either inflationary pressures or anemic GDP and employment growth.
On March 10, 2000 the NASDAQ composite, a stock index representative of high flying dot-com companies, peaked at 5048 (Zarroli, J. March…… [Read More]
The Federal reserve realized the big negative impact of MBS and announced a 600 billion program in November 2008 to purchase these securities and this helped to bring back some liquidity into the market. In March 2009, it added another $750 billion to bring the total to $1.25 trillion.
The Fed has the power to create or print more money to increase money supply in the market and this is exactly what it did. Though the downside of this measure is inflation and an increased balance sheet for the Fed, Ben Bernanke, the chairman of the Federal eserve felt it was imperative to boost the economy. Through this tool, the Fed generated money and provided it to large corporations that depend on loans to ensure that their growth was not drastically affected. The Fed executed this policy through the lending institutions to increase economic activity and the dependent employment numbers.…… [Read More]
Federal eserve Bank
Financial services as an industry has progressed to become one of the widely transforming sectors of the global economy, having significant changes in information transference and processing, innovation in terms of commodities and processes, and rapid competition among the financial institutions -- among themselves and also among their several customers. The industry and its part in the transformations in the economy show that the supervising and regulatory structure also needs to be reevaluated periodically. The aim of bank regulation is mostly the same -- to attain maximum static and dynamic efficiency levels in the midst of a politically and economically permissible framework which is stable and equal. However the profits are always associated with a cost by means of stability and equity. A more stable and equal financial system usually need sacrifices with regard to efficiency. (Saunders, p. 3)
A properly functioning, effective banking system is necessary…… [Read More]
" (Structure of the Federal eserve System)
The 12 Federal eserve Banks extend banking service to the depository institutions and also to the federal government. To the financial institutions it takes the responsibility of maintaining reserve and clearing out accounts and entails various payment services incorporating checks, electronically transferring funds and circulating and receiving coins and currency notes. As the banker of the Federal Government they function as fiscal agents. They maintain the Treasury Department's transaction account; they pay treasury checks; enable to process electronic payments and issue transfer and redeem U.S. government securities. (eserve Bank Services)
The functions of Federal eserve start with the formulation of the Monetary Policy in accordance with the needs of the national economy. The Federal eserve System provides three basic tools for conducting the monetary policy such as open market operations, discount rate and reserve requirements. The Open Market Operations is used as the…… [Read More]
The current state of the United States economy is not encouraging. Even though there has been false hope about it, the chances are that it will hardly last for long. The long-term trends that are negatively impacting the economy and financial system are showing no signs of reducing. As each day passes, the economic foundations of the country continue to crumble. The debt of the country has increased and the population is consuming more wealth than what is produced. In addition, unemployment and inflation levels are high coupled with slow economic growth, which remain the main features of the U.S. economy. The Federal eserve is the key to solving the current economic situation that is experienced in the U.S. This is because it is the central bank of the United States and the operations of every bank are monitored by the Federal eserve (Hafer, 2005). In 1913, the…… [Read More]
This is the interest rate that banks lend their balances on at the Federal Reserve to other banks. It exercises this control by influencing the demand for and supply of these balances through the following means:
Open market operations -- the purchase or sale of securities, primarily U.S. Treasury securities, in the open market to influence the level of balances that depository institutions hold at the Federal Reserve anks (The oard's Publications Committee, 2005).
Reserve requirements -- requirements regarding the percentage of certain deposits that depository institutions must hold in reserve in the form of cash or in an account at a Federal Reserve ank.
Contractual clearing balances -- an amount that a depository institu-tion agrees to hold at its Federal Reserve ank in addition to any required reserve balance.
Discount window lending -- extensions of credit to depository in-stitutions made through the primary, secondary, or seasonal lending programs (The…… [Read More]
S. growth will proceed at a crawl in 2008, which will provide little comfort for the dollar" and most certainly call for intervention again by the Fed. "In some fashion the dollar will continue to decline," according to Adnan Akant, a specialist in currency at Fischer Francis Trees & atts, money managers in New York City. For investors, Slater continues, having a weaker dollar offers choices; to wit, if you believe the decline has further to go before it bottoms out, buy stocks in currencies that are hot right now. If the dollar weakens, the returns from those stocks will be more valuable when they are converted back into dollars, Slater assures.
Baker, Gerald. (2007, November 25). Beauty deals a beastly blow to the U.S. Dollar. The Times. Johannesburg South Africa. Retrieved Nov. 24, 2007, at http://www.thetimes.co.za.
Federal Reserve System. (2007). Purposes & Functions. Retrieved Nov. 24, 2007,…… [Read More]
It might seem strange that despite its central role in government affairs, that it is still somewhat privately owned. There are also regional branches, located in 12 states. This allows the Federal eserve to protect and stimulate regional economies all over the nation. The Federal eserve was created in a very unique way which sets it apart from the control of Congress and the Senate. When it was established, the creators wanted to make sure that no administration could have too much control, or to use it for their own good. So the bank was established independent of the Federal Government, running itself. This keeps greedy hands in the Government from reaching too far into the nation's reserves for their own selfish purposes. Congress has recognized that it is an independent financial institution, and therefore with no interests in arty politics or election years.
Federal eserve Bulletin. "The Federal…… [Read More]
Collateralized loans will have demonstrably greater security than uncollateralized loans.
While these measures seem sound and will hopefully ensure that no institution will be penalized for making the types of loans that are necessary for the international economy to remain functional, much still needs to be done in exercising oversight over the practices that lead to the failure of Lehman Brothers in the first place. A lack of transparency in financial dealings remains a concern, and there are still a variety of financial instruments that are poorly regulated -- moreover, the precipitous drop in interest rates orchestrated by the Fed to stimulate the economy could give rise to yet another crisis of over-borrowing and widespread consumer debt. Greater regulation and oversight is necessary as well as greater insurance of debt.
Press release. (2008, December 18). The Federal eserve. etrieved November 18, 2009
http://www.federalreserve.gov/newsevents/press/other/20081219a.htm… [Read More]
Their basis of criticism is that it had very expansionary monetary policy in the early days that gave room for misallocation of various capital resources. This lead to various undesirable economic scenarios such as the support of a massive stock price bubble. It has been argued that even though the Federal reserve did not cause the Great depression, it mitigated it through the unnecessary contraction of the money supply which was not necessary at that time since the markets by that time needed to be liquidated (Friedman, 1985).He argued that the Fed should be overhaulead and then replaced by a specialized computer system whose role would be to set rates that are derived from the standards econometrics. However, the Australian School economists have argued that the Fed's manipulation of the supply of money in order to put a halt on "gold flight" away from England lead to serious financial malinvestment…… [Read More]
Federal Reserve oard [...] history of the oard, and what its purpose is in the United States. The Federal Reserve oard is an integral part of the Federal Reserve System of the United States, and it creates and maintains much of the monitorial policy of the nation. The board members are responsible for the monetary health and security of the country, and so shoulder a huge responsibility to the country and to the people.
THE EARLY FED
The Federal Reserve oard is the governing element of the Federal Reserve System, which an act of Congress established on December 23, 1913. The board contains seven members, and is referred to as the "oard of Governors." The seven board members are:
Appointed by the President and confirmed by the Senate to serve 14-year terms of office. Members may serve only one full term, but a member who has been appointed to complete…… [Read More]
Federal eserve System is.
The Federal eserve System
The Federal eserve serves as the central bank of the United States. It was founded by the Congress in 1913 to serve the function of provide the nation with a secure and committed monetary and financial system.
Today the Federal eserve holds the responsibilities in four areas: (1) conducting the nation's monetary policy; (2) supervising and regulating banking institutions and protecting the credit rights of consumers; (3) maintaining the stability of the financial system; and (4) providing certain financial services to the U.S. government, the public, financial institutions, and foreign official institutions.
The Federal eserve System is controlled by the Board of Governors of the Federal eserve System who formulate the initial margin requirements under egulations T, U, and X. Margin loan increases and decrease in aggregate value and relative to market capitalization, affect margin requirements instrumentally affecting the prices of common…… [Read More]
In addition to managing the value of the U.S. dollar through interest rate policy, the Fed also engages in foreign currency operations. This involves the buying and selling of U.S. dollars on global currency markets. Doing so can expand or contract demand for the dollar, thereby increasing or lowering its value. The Fed does this in order to create demand for U.S. products, or to help fight inflation.
In the Fed's role as one of the supervisors and regulators of the banking system, it has been gifted with certain enforcement mechanisms. The Fed can use both formal and informal actions to control the behavior of banks. The first step in enforcement is that the Fed will present to the managers of the bank in question all of its findings and demand that the issues be addressed. If the bank does not comply, the Fed will then request that the bank…… [Read More]
Federal Reserve buys government bonds, it increases the overall money supply in the nation and thus pursues an expansionary monetary policy. Through buying bonds the Fed increases the amount of reserves in the banking system, leading to more loans and hence more deposits. Since deposits are part of the money supply, the money supply increases. This is often done in combination with lowering interest rates to speed up the economy by infusing it with a larger available supply of money to spend upon consumer goods.
Conversely, by selling government bonds and reducing interest rates, the Federal Reserve reduces the overall money supply. The money supply is determined by the amount of currency and bank deposits held by the public, as well as the amount of reserves held by banks. When prices and inflation are going up, the Federal Reserve tries to slow down the economy by making fungible money scarcer,…… [Read More]
Alan Greenspan's testimony starts with a comparison between the state of the U.S. economy in July 2004, time of his present testimony, and the state of the economy in February 2004, the time of his previous testimony in front of the U.S. Congress.
In February 2004, the main problem of the U.S. economy, as identified by Greenspan, was the fact that the company's increase in income and net profits were related to a better use of human resources rather than on an increase in employment. In other words, despite the fact that the economy was on the rise, it failed to produce new jobs. This was a direct consequence, in Greenspan's opinion, of the risks associated with increased employments, more notably "corporate accounting and governance scandals," a "decline in stock prices" and the overall "geopolitical tensions"
As compared to the unemployment situation in February 2004, the period up to July…… [Read More]
The United States banking system has been around for quite a while. Indeed, the Bank of New York was founded in 1784, a scant eight years after the United States was created. The banking system has two major functions. First, they operate an overall payments system. Second, they facilitate and allow for financial intermediation. There was no formal financial system in the colonial states prior to the formation of the United States. The modern form of the banking system has only really been around since the early 1900's. The nascent form of the banks as they exist today was created by Alexander Hamilton. As of the inauguration of George Washington in 1789, only three banks existed in all of the colonies. Generally speaking, banks are typically financial institutions that are chartered and regulated mostly by the state in which the bank or banks operate. The banking system of…… [Read More]
Fed's Bullard: Current Fed Policy Much Easier Now Than in 2012, which was published by The Wall Street Journal on February 14th, 2013, financial reporter Michael S. Derby methodically examines the claims of Federal eserve officials, who have stated that changes to their monetary policy have proven to be productive over the last year. The purpose of the article is to provide readers with access to the latest public statements made by Federal eserve Bank of St. Louis President James Bullard, a voting member of the monetary policy setting Federal Open Market Committee (Derby, 2013) who recently rendered his appraisal of the Fed's latest round of adjustments to its monetary policy. Derby makes reference to a crucial modification in which "the Fed decided to commit to keeping short-term interest rates near zero percent until what is now a 7.9% unemployment rate falls below 6.5%, as long as expected inflation doesn't…… [Read More]
Federal eserve atio
What federal reserve ratio? Why important?
The Federal eserve ratio refers to the funds banking or depository institutions are mandated by law to hold against their deposit liabilities. This fund is a proportion of the amounts of money banking or depository institutions hold in form of net transactions accounts and deposits that make up the institution's liability to its customers. This proportion is a predetermined ratio arrived at through policy reforms targeting to safe guard the interests of its citizenry and controls the volume of money supply in an economy (ose & Sylvia, 2010).
The sets to enforce a legal safe guard measure to serve the interests of economy's depositors with the banking industry (ose & Sylvia, 2010). In this perspective, if a federal reserve is set as 11% of the banks liability, the banks are expected to deposit with the central bank/reserve bank an amount equal…… [Read More]
tactics that the Federal Reserve uses to manage the economy. The Federal Reserve has a mandate to manage the overall health of the economy (usually GDP), the inflation rate and the unemployment rate. To strike the right balance, it utilizes a number of different techniques. The three main ones are open market transactions, the discount rate, and reserve requirements. All three of these can be used as part of either an expansionary or contractionary strategy.
An expansionary strategy is one that seeks to stimulate economic growth. In general, some degree of economic growth is always desirable. Expansionary policy encourages business investment or it pumps money into the economy. By altering the supply and cost of money, the Federal Reserve can encourage business investment, but also to a lesser degree consumer spending. Expansionary strategy should increase the GDP, increase inflation and lower the unemployment rate.
At times, however, the economy could…… [Read More]
Government Sanctioned Monopoly: The Electric Company: for the Public's Good or Ill?
The defined concept of a monopoly causes many students of economics to assume that any company that engages in monopolistic practices is automatically illegal, according to the Sherman Anti-Trust Act of the United States. A monopoly simply stated is an economic entity that completely dominates one facet of industry or one service industry. It alone sets the price of the good or service it is selling, because it has no competition, in contrast to the perfect competition of a competitive marketplace or even the limited competition of an oligopolistic marketplace. But occasionally the United States government allows certain organizations to behave as corporate monopolies for the public good, such as electrical power.
The reason electrical power companies are one a such a market situation where monopolies are allowed, in fact encouraged (as these utility monopolies are not generated…… [Read More]
It is thought that the pace of the recovery will be slowed by people's desire to rebuild wealth, still-tight credit conditions facing some borrowers, and, despite some tentative signs of stabilization, continued weakness in labor markets. With considerable resource slack continuing to suppress cost pressures and with longer-term inflation expectations stable, it is thought that inflation subdued for some time (Monetary Policy eport to the Congress, 2010).
The Federal eserve has continued to support the functioning of financial markets and promote recovery in economic activity doing a wide array of things. The Federal Open Market Committee (FOMC) has maintained a target range of 0 to 1/4% for the federal funds rate throughout the second half of 2009 and early 2010. They have also continued to purchase Treasury securities, agency mortgage-backed securities (MBS), and agency debt in order to provide support to mortgage and housing markets and to improve overall conditions…… [Read More]
Federal Reserve Policy
he Federal Reserve through open market operations can be a net seller or buyer of U.S. reasuries. As a net seller of bonds the Fed is enacting policy which will tighten the money supply taking money out of circulation. he policy is conducted as follows: he Federal Reserve Open Market Committee instructs the trading desk at the New York Federal Reserve Bank to sell a specified amount of their holdings of U.S. reasuries. In doing so, investors will purchase these bonds from the FED through their currency or bank deposits, thereby reducing the amount of dollars held by the investor. he transaction reduces the money supply by a reduction in currency held by the public and reduced bank deposits. Consequently, banks will have fewer deposits and as a result "find themselves with a smaller quantity of reserves. In response, banks reduce the amount of lending,…… [Read More]
The overall credit conditions have for example been severely affected by housing market and other economic trends. This has been exacerbated by energy and commodity price increases, which have affected household buying power negatively.
Concomitantly, the inflation rate has remained high at nearly 3.5% for the first five months of 2008. Chairman ernanke also noted that the trend in rising prices was likely to further increase inflation. Furthermore, oil production has risen only slightly, despite sharp price increases. This indicates tighter government control over oil reserves.
The declining value of the dollar in foreign markets also seems to be a matter of concern for congress that both result from and in turn affect the volatility of oil prices. There does not seem to be a particular emphasis on any single aspect of inflation or the recession. Instead, the general consensus appears to be that all the elements within the economic…… [Read More]
The economy began to contract still further immediately after the election of Franklin Delano Roosevelt. Fears that Roosevelt would devalue the dollar or even abolish the Gold Standard caused both domestic and foreign investors to once again to "convert dollars to gold, putting pressure on both the banking system and the gold reserves of the Federal Reserve System. Bank failures and the Fed's defensive measures against the gold drain further reduced the stock of money. The economy took its deepest plunge between November 1932 and March 1933, once more confirming the temporal sequence predicted by the monetary hypothesis. Once Roosevelt was sworn in, his declaration of a national bank holiday and, subsequently, his cutting the link between the dollar and gold initiated the expansion of money, prices, and output" (Bernanke 2002).
Roosevelt did not abandon the gold standard wholesale. However, he did devalue the dollar, nationalize gold owned by private…… [Read More]
special interest groups have too much power in politics today? Why or why not? Do you think we should allow these interest groups to continue to function as they currently do? Why or why not? What do you think would happen to our nation if we did not allow interest groups to continue to operate?
I do feel that special interest groups have too much power in politics today and I feel that this is a big part of the appeal for "outsiders" like Sanders and Trump in the race today. Special interest groups like AIPAC for example can make or break political careers, which is why when Netanyahu visits Congress to speak, nearly every member bows and bends at the knee: AIPAC is a big donor to campaigns. Likewise, Wall Street interest groups and corporate interest groups are also big donors to campaigns and Establishment politicians like Hillary benefit…… [Read More]
End the Fed?
The nation does not need to go back to a gold standard, though this certainly wouldn’t hurt. The nation has the right to coin its own currency and that currency can be backed by the authority of the U.S. government and nothing else. It does not need to be backed by gold. The point of the gold standard is to help control inflation—to keep the dollar supply at a level limited by the amount of gold possessed by the government. It gives those who use the dollar the confidence to accept it as a medium of exchange. Since the country was taken off the gold standard by Nixon, and since the nation long ago handed over the right to print money to the Federal Reserve, it both gave up its sovereignty to this banking cartel and the limit on money supply that the gold standard gave. Nixon…… [Read More]
Federal Funds Rate
The federal fund rate was part of the solution, comprised in the Federal Reserve Act of 1913, to centralize the banking system and gain public control of the money supply, inflation, and economic growth. The banking crisis of 1907 was a result of decentralized, unregulated banking that caused confusion with private bank notes being used as currency. There were occasional episodes of monetary mismanagement where the money supply was not appropriate to fulfill the needs of the economy. Too much money caused rapid inflation where too little money stunted economic growth by hindering production and the exchange of goods and services. There were no nationally consistent banking policies and no one entity had control to implement policies until the Federal Reserve Act of 1913 became a national law.
The Federal Reserve System was created with the Federal Reserve Act of 1913 with a oard of Governors to…… [Read More]
The Office exacts a new level of accountability, which encourages a broader range of competitions and new organizations to enter these competitions. Congress authorizes the Office to develop the franchise funds pilots and to expand the competitive environment. It also invites the private sector to participate in new markets and at new levels of commercial workload. At the same time, it encourages the public to compete for the same work on a level playing field. To insure that the taxpayer continues to get the best out of the deal, the Office suggests a re-examination of outsourcing, cross-servicing and in-house performance decisions. The ultimate goal of the Office is to restore public faith in Government through a more effective management of its resources and by giving citizens and taxpayers greater value for their dollar. Federal employees have been found to be extremely cost competitive. Its Revised Supplemental Handbook expressly prefers private…… [Read More]
What this shows is how the current financial crisis / recession have placed a drag on both programs that are facing severe challenges from the large numbers of uninsured. Where, the lack of health insurance is indirectly forcing people to turn to both programs, once their condition becomes so severe that it can no longer be ignored. At which point, the costs increase to treat these people which causes the overall levels of the national debt to increase.
However, the current recession is also having a direct impact on both entitlement programs. This is because a large number of aby oomers are approaching retirement age, which means that many will often look to both programs as way to supplement their income and health insurance. Then, when you combine this with the fact that the current recession is causing incomes to decline and health insurance premiums to increase, means that…… [Read More]
Federal and State Government
An Analysis of Powers in Federal and State Government
The debate over having a strong central government or strong state government in the early days of the epublic seemed to fall on the side of the states. But as the years have proven, the Constitution, which extended very specific powers to the U.S. government, has come to be interpreted in ways that would extend even more power to the central government than at first seemed possible or even permissible. This paper will show what powers are actually extended to the federal government (according to the Constitution), what powers are extended to the state governments, the power limitations of both, and the powers that overlap.
As Ellis Katz (1996) states, "The Constitution, as written and ratified, creates a system of dual federalism in which both the national government and the states are sovereign in their respective spheres…… [Read More]
Federal and State Websites
State/Federal Research Project
Employment raining Panel
Employment training panel (EP) is a business and labor supported Californian State agency, which funds the vocational training costs. EP clearly outlines its programs, and can only involve in fund provision for training employers who are subject to the payment of Employment raining ax. he eligible entities in this case may include single employers who are subject to the UI (unemployment insurance tax), and holding a California Employment Account with a prefix number of 699 or below. Similarly, a group of employers may be eligible. Such groups include Joint Apprenticeship Committees, Chambers of Commerce, Economic Development Corporations and rade Associations. raining Agencies come in as the third group, including educational institutions such as university foundations, community colleges, adult schools, or the regional occupational programs. Additionally, workforce investment boards also contribute in the list of the primary audience to…… [Read More]
Fed Policy Change
The most recent Fed policy change was the decision to raise rates by 25 basis points. It is expected that the Fed will raise rates three more times (probably by the same amount) in 2018 and there are roughly 60% odds that the Fed will raise one more time this year (perhaps in December). However, I do not expect this trend to continue, because the debt of the nation is so great that it is simply unserviceable. If rates are raised, the interest owed on the debt will increase and that means more money going just to pay the interest on the loans the country has racked up. At the same time, pension funds and other types of funds are chasing yield in risky markets (the stock market is at an all-time high this year) because they cannot earn enough in interest by purchasing bonds (since rates…… [Read More]
45, for instance, where he argues that "the State governments may be regarded as constituent and essential parts of the federal government; whilst the latter is nowise essential to the operation or organization of the former. ithout the intervention of the State legislatures, the President of the United States cannot be elected at all." (Rossiter, 287) This is a position which suggests not only that the Federalists felt that significant power had already been entrusted to leaders at the state level, but also that this power is seen primarily as a function of the power of the federal government. Thus, we are given further confirmation that the Constitution was inherently a federal document.
In key segments of the debate such as that shown in the Anti-Federalist Paper No. 17, we can see that those who stood in opposition to the empowerment of federal authority derived from the Constitution were a…… [Read More]
But when the Fed declared a moratorium on its consistent hikes in 2006, not everyone cheered. Said one economist: "According to their statement, the main reason is that the Fed believes inflation is destined to fall even in the absence of further monetary tightening. I find both good news and bad news in that rationale. The good news is that the Fed is looking ahead, acting on a forecast, rather than just opening the window, taking the economy's temperature and deciding what to do. The bad news is that inflation forecasts are not very accurate. And the other bad news is that if the Fed expects a weak economy to drag inflation down appreciably, it must be pessimistic about the outlook for growth" ("Commentary: The pros & cons of unchanged interest rates," Nightly Business Report. PBS.com, 2006). Little had really changed in the economy, said some economists, the Fed was…… [Read More]
economic and financial crisis (2008-2009), the Federal Reserve took exceptional measures in order to combat the effects of the crisis on the American economy. These measures translated into an expansionary policy that included pumping money in the economy and purchasing assets that were in trouble. Through its expansionary work, the government was able to balance some of the effects of the crisis.
The question that seems to be on everybody's mind (and lips) today is where does it all end? One thing everyone can agree on is that this type of expansionary policy cannot last forever. The United States economy functions as a free market economy where the laws of supply and demand govern the realities of the market. A continuous and permanent intervention of the Federal Reserve is neither possible, nor healthy. What nobody can agree on, however, is when the expansionary approach should stop: now, in the near…… [Read More]
" Andrews, 2004)
The Fed has always been most concerned about the economy growing too fast, outpacing real development, than other, more publicly influenced government agencies, which are apt to look upon growth with purely rose colored glasses, as consumers wish to see more jobs and retailers wish to see more immediate short-term sales to generate profits. Also, consumers wish to borrow more money for durable goods. and, despite the recent strong economic numbers regarding job growth, "the economy is still showing signs of fragility." There is a fear that "temporary factors," such as seasonal factors and deep discounts offered by makers of cars and other durable goods, rather than permanent and long-lasting improvements in the American economic infrastructure. (Andrews, 2004)
Andrews, Edmund L. (November 8, 2004) "Fed expected to stay the course for now." The New York Times. Business Section. http://www.nytimes.com/2004/11/08/business/08fed.html?oref=login
Monetary Policy… [Read More]
In demonstration, Gross notes the anecdote of a drug mule traveling from pain to Colombia, in whose stomach officials found $197,000 in euro notes (Gross 2007).
While the underground economy serves as an indicator of stability and value for the currency market, this stability and value are influenced by a confluence of further economic factors in addition to the ones already mentioned above. Chinn & Frankel (2005:15) focus on four specific factors that influence the future probability of euro dominance over the dollar.
The first of these is patterns of output and trade. This relates to the already-mentioned amount of market presence of a certain currency. Currently, the U.. dollar enjoys the greatest presence in the world economy. Interestingly, the authors hold that, if output and trade are regarded as measures of a country's economy, Japan should be the second in the world. However, other factors such as economic size…… [Read More]
The Fed's assets will also increase due to the strong dollar globally stabilizing it as a trading currency with leading partners including China. All of these factors will lead to a stronger asset base for the Fed.
7. The Fed will keep from selling these assets if the dollar does not gain in strength relative to other currencies globally, and would also not sell them if the economy did not reach a growth level that would ensure excess reserves were not needed.
8. Reverse repos are when "the Fed lends securities to banks in exchange for cash for a set period. At maturity, the securities are returned to the Fed, and the cash goes back to the primary dealers. By doing this repeatedly, the Fed can contract the money supply "(Calomiris, a.15.). The author says that in large financial transactions involving reverse repos the effects are unknown and therefore unreliable.…… [Read More]
S.B. 1070, ACA, AND FEDEAL PEEMPTION
1070, the ACA, and Federal Preemption
S.B. 1070, the ACA, and Federal Preemption
The Tenth Amendment was intended to limit the scope and power of the federal government, thereby preserving some measure of state autonomy (Lash, 2006). The Tenth Amendment accomplishes this by stating explicitly that the federal government can only exercise those powers enumerated within the U.S. Constitution. All other powers are left to the states. In James Madison's words, a Federalist, the "… powers delegated by the proposed Constitution to the federal government are few and defined. Those which are to remain in the State governments are numerous and indefinite." (p. 166). The Tenth Amendment therefore allows states to retain their freedom, sovereignty, and right to self-determination, as long as it does not conflict with the powers conferred to the federal government by the Constitution.
Madison, however, never viewed the…… [Read More]
eserve Personnel Management Systems Division: Officer Evaluations
This paper engages in a thorough assessment of the culture, organization and technology of the reserve personnel management that operates as a branch within the Personnel Service Center of the United States Coast Guard: specifically the Officers Evaluation Systems. The method used to assess this particular branch relies heavily on ethnographic skills and related techniques. According to the official website of the U.S. Coast Guard, this is the division which handles "boards, panels, promotions, evaluations, advancements, retirements, resignations, discharges and separations for all reserve officer, chief warrant officers, and enlisted members" (uscg.mil, 2013). This is the division which deals with assignments, copies of records, medical issues and disability, individual ready reserve, promotions, separations, reserve retirement requests, policy waives and a host of other connected factors.
By scrutinizing closely factors like culture, organization, technology and related issues, one is able to obtain an accurately…… [Read More]
Mediocre material will, likely, thus be introduced into the market, and fledgling authors discouraged. This may in a matter of fact not only prove detrimental for general culture but also for the store itself, since discouraged with the level of prevalent reading matter, potential customers may frequent other locations for their desires.
Conclusively, as an example of Mr. Flaherty's impact on the book-selling business, relaxation of tax demands on private investment may profit the business depending on its projects and ambitions. The more ambitious its projects, likely the more it may profit. I am unsure, however, how much 3 's Used Books can make itself independent from dealing with the U.S. Or with other countries; a bookstore, by nature, has to have international dealings in order to succeed. As regards the economic policies, particular to Ontario, passed in 2009, the bookstore, can with provisos, mostly benefit form their implementation.
eferences…… [Read More]
8 for August, 2008, the most recent available (next release is October 20th). This represents a decline over the previous month, and the lowest level of the year. Over the past three months, this index has trended down. In June this was at 102.0, then 101.3 in July. Prior to that the level it had been stable all year (either 101.9 or 102.0).
In terms of individual components, the following components were up: average weekly unemployment initial claims, stock prices, manufacturing new orders (consumer goods) and index of consumer expectations. Of these, it should be noted that the stock prices are lower than at any other point this year except for July. Average weekly unemployment initial claims rising is a negative component, so a rise will reduce the leading indicators index. Manufacturing orders represented a slight increase but is well down for the year. Therefore, only consumer expectations made a…… [Read More]
While abortion is not banned, it is not encouraged either. Its lack of acknowledgment at the state and local policy level demonstrates the lack of priority or evasion of the government to acknowledge abortion as a healthcare service that must be stated specifically as a subsidized service by the federal government.
Interestingly, with the approval and passage of the Affordable Care Act (or "Obamacare"), federal policy on abortion remains vague if not directly banned or discouraged. While abortion is not explicitly stated as a health service that will be subsidized under this new healthcare law, it is contended that abortion services and its funding are "always included unless it's explicitly excluded" (O'Neil, 2012). Thus, women can avail of abortion services as a healthcare and preventive service subsidized by the federal government and covered in health insurance plans.
This new development in the federal policy on abortion is a step forward…… [Read More]