In an Op-Ed piece for the Washington Post, Robert J. Samuelson directly addresses what we did in class in the last unit- namely, how effective is monetary policy? Samuelson comes down firmly on the side that the Fed may not have as much influence on consumption, but it certaily does on inflation targeting.
Thanks to AP Econ teacher Matt McWenie, Phoenix AZ, for the heads up on the AP Econ listserve.
4 comments:
It makes sense that technology has affeceted the efectiveness of the fed's tools, much as it has affected every other aspect of the economy. Concepts that are black and white in physical form become blurred when they exists only electronically in cyberspace. One thing I don't get is that if we are in such a tough economic situation now, why is bernake being blamed for his current actions when, due to lag time, the current situation was caused by fed actions many months ago, possibly when bernake was not even appointed yet.
This does include a lot of what we discusses today...housing declines do not alter the low unempl. and inflation. And the fact that these odd occurances imply a potential recession might occur is quite frightening since this article discusses why the Fed has lost some of its influence on our economy due to increased credit spending vs. borrowing from bank institutions. More importantly, they have to decide whether they should raise interest rates to lower inflation or maintain them/lower them to avoid a recession...
tedchnogoly is everything is econmics and producion. the fed has lost most of the influnecial ways due to borrowing from banks and credit card spending and oweing. they should lower both interest rates and inflation to avi9od ressicion although i can't see us going into a deep recession.
It does have relations to our current class work because the Fed has to do with the manipulation of the interest rate, which can deal with inflation or recession. The monetary policy implemented by the fed does seem quite effective as it fights off inflation and recession. Even with less influence on consumption it seems as if adjusting the interest rates is a good enough way to maintain a consistent economy.
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