The Pros And Cons Available To The President, Congress And The Federal Reserve

The many different tools that are available to the President, Congress and the Federal Reserve can be used to move the nation’s economy in a desired direction or correct potential problems such as inflation or unemployment. I believe that these policy makers should not take the use of these tools lightly. We have a great foundation for the economic system here in the United States that has evolved over hundreds of years and in most cases, fluctuation in the business cycle is a very normal part of the business process. Since we now operate in a global economy, the policy measures we enact here domestically will have a great impact on the way we do business abroad. There is always a natural contraction and expansion present even in healthy economies

The main tools available to smooth out the peaks and valleys of an economic cycle include taxes, government spending, the raising and lowering of interest rates, and the tightening or loosening of the money supply. The deployment of each of these tools can produce a desired movement in economic activity. This can include using policy to keep the country from entering a recession or to stave of high unemployment by increasing the money supply. Taxes can be levied or interest rate can be raised to control high inflation, while tax breaks and lowering interest rates can spurn stalled growth to fend off recession. Spending is the basis for our economy, both governmental and consumer. Without it, demand decreases, GDP lowers and unemployment can creep up just to highlight a few consequences. Our system is a very delicate balance of spending, taxation, earning, investing, and more spending. The tools available to policymakers should be deployed responsibly and used to counteract the scenarios that can hurt our economy. They should not be used to artificially influence the economy that is moving at a steady pace, one that will have natural ups and