most powerful amplifier The Federal Reserve and its Role as U.S. Money Cops

by:Winbridge      2019-12-02
The Fed is undoubtedly one of the most powerful countries.-Misunderstood.-All American institutions.The Fed's steady hand as a "central banker" in the United States is particularly critical to the U.S. economy.S.Economic performance over the past 25 years.Why?For the most part of these years, the administration and Congress's management of fiscal policy (taxes and expenditures) is not admirable.So the huge and irresponsible accumulation of federal debt remains our collective enduring legacy at the moment.Fed today-Under the control of Chairman Bernanke-As an inflation fighter, there is a high level of credibility.In the world of central banks, there are no higher goals...There is no greater success.The Fed's primary responsibility for inflation control is to maintain price stability in the United States.Over the past 15 years, it has been largely successful, with consumer prices rising at an average rate of 2 per year.7% since 1991.More comprehensive inflation measures rose at lower interest rates.In contrast, U.S.Consumer prices rose by an average of six.Between the ages of 70 and 80, there are 2% people each year, experiencing a painful double testInflation in 1979 and 1980 per cent.Today's Federal Reserve is very worried that the current rise in energy prices affecting the economy will lead to a sharp increase in the prices of thousands of products and services throughout the economy.Such a pass-Fed officials are sleepless because of energy costs.Coupled with volatility in commodity and gold prices, US fears of terrorism have intensified.S.Abroad, large purchases of US Treasury bonds.S.Treasury bonds issued by foreign investors, and other topics, have a feeling about the lives of Fed officials.This is not for the timid.In its efforts to maintain price stability, the Fed has repeatedly been asked to do so...1) \ "take the punch bowl away from the party" (to slow down the economy), implement preventive "drugs" on its patients (US) when it becomes a bit too rowdy2"S.The economy), where necessary, in order to minimize opportunities for more serious "inflation diseases" to occur later, this requires more drastic action (more painful drugs) note: most of the changes in monetary policy are implemented by the Federal Reserve through a process called open market operations to increase reserves to the banking system or withdraw reserves from the banking system.The result of these moves is to raise or lower the Fed's most critical interest rate-the federal funds rate.The federal fund rate is the rate at which commercial banks and certain other financial institutions invest excess funds in other commercial banks on an overnight unsecured basis.The federal funds rate is undoubtedly the most important of all short positions.Regular rate.Changes in Federal fund rates immediately affect the level of all other short-term fundsShort-term rates including loan rates and various short-term ratesInvestment interest rate.The discount rate is another interest rate controlled by the Federal Reserve, which is almost irrelevant in today's monetary policy."Dog" and "tail" although many of the Fed's official duties remain unchanged from previous years, the nature of the Fed's monetary policy flexibility has changed significantly over the past 25 years.In my opinion, the Fed is no longer the main determinant of when monetary policy needs to change ---the market is.Since the Fed was founded in 1913, it did not decide monetary policy until the end of 1970.Bond market in the United States-It was much smaller in that time.-Then line up quietly.At that time, the Fed was a "dog" and the bond market was a "tail ".The relationship has now been reversed.The reality today is that the Fed provides a strong and very inflationary monetary policy mix to a large extent --Sensitive bond marketThe market is now "dog" and the Fed is "tail ".Inflation today-The cautious bond market provides the Fed with less monetary policy flexibility than ever before.Any excessive attempt by the Fed in the futurestimulate U.S."Easy to make money" economic growth will encounter long-term growthRegular rates (protecting lenders/investors from upcoming inflation) and irresponsible calls from the Fed.How is the correct monetary policy determined by the Federal Reserve?The Fed is clearly concerned about the effects of historically tight inflation in the labor market today and the possible wage pressures.In addition, today's Federal Reserve uses the old monetary policy.Balance the scale with four pallets in style.On different plates, the Fed is balanced: 1) criticism from the "hawks" who believe inflation is under every stone.Hawks are often critical of the Fed, pointing out that the agency is not positive enough to spread inflation expectations. He has always believed that monetary policy is too restrictive.The Dove believes that the Fed usually goes too far in tightening monetary policy or easing policy, and the Fed often threatens the economy with the word "r...The price performance of gold and other commodities recently.Price movements in these commodities can serve as a dangerous sign of inflation or as a sign that monetary policy is too strict.S.The yield curve of government bonds, including the last 10-year U.S.Treasury bills and 30-year U.S.Yield on government bonds.This information provides clues to the bond market's collective view of inflation expectations, and only when all pallets are "relatively balanced" can the Fed consider monetary policy appropriate.The Fed must also consider the impact of inflation in the United States.S.The dollar is stronger or weaker than other global currencies.The Fed must also consider monetary policy actions by other major central banks, including the European Central Bank, the Bank of England and the Bank of Japan......Not for the faint.
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