Federal Reserve
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Federal Reserve Essay
In order for the President, George W. Bush, and the Federal Government to ensure a stable and secure economy the Federal reserve must use a loose money policy. Through this monetary policy they would hope to lower the current unemployment from 6% to about 2 or 3% as well as keep a creeping inflation of about 3%. The best way to achieve this would be to lower the discount rate, put more money into the open market and lower the reserve requirements for banks.
The Federal reserve has tools in which they can control the economy and one that should be used to create more jobs is by lowering the discount rate. This will decrease the rate that the partner banks can borrow money from the Fed which will then decrease the interest rate on loans. The current rate is 1% and by lowering this the number of people that borrow money will increase and more money will be spend. This will thus improve the economy and create more jobs.
Another way for the President Bush and the Federal Reserve to improve the economy is to put more money into the open market. The best way to do this would be to buy government bonds which would boost the American economy by adding tremendous amounts of money...