1. Describe three ways in which the Federal Reserve can change the money supply.?

Question

2. If the Federal Reserve is going to adjust all of these tools during an economy that is growing too quickly, what changes would they make?
3. If the Federal Reserve is going to adjust all of these tools during an economic recession, what changes would they make?
4. What changes, if any, to the current condition of these tools would you make at the next meeting of the Federal Reserve? Explain why and the benefits/drawbacks of this strategy.

Answer 1

1. The federal reserve can change the money supply in 3 ways
a. they can buy or sell bonds through open market operations Buying bonds will decease the money supply will selling will increase it.
b. They can change the required reserve ratio (RRR) for banks. The higher the RRR the less money banks are able to loan out.
c They can raise or lower the discount rate of interest they charge to banks.

2. If the economy is growing to quickly they need to cut the money supplied in the market. They would sell bonds, raise the RRR and/or raise the rate of interest to banks.

3. The Fed would do the opposite as listed before. They would increase the money supply. They would buy bonds, lower the RRR, and/or lower the rate of interest to banks.

4.At the next meeting, i would increase interest rates to curb the growing inflation. The benefits are that inflation would be under control but the drawback is that it stymies growth.

Answer 2

1. The federal reserve can print more money or increase/ decrease the interest rate. Loan and borrow since it is a privately owned banking system.
2. They print more money ( which is bad because it is not backed by anything )
3. They lower the interest rate. They suck
4. I would slowly ween our country off of the privately owned, unconstitutional federal reserve. We need a currency that is sound and cannot crash.

If you don't know already, One of the main reasons why we went into Iraq is Saddam vowed to stop accepting the dollar for oil. Our dollar was backed by Opec in a trade deal for a while. Saddam said he would only accept the Euro. Also the Federal Reserve has been a force behind every war since WWI. They wanted us to go into the middle east so they can control the monetary supply.

Similar to Venezuelen president that stated he wouldn't accept the dollar, our CIA attempted an unsuccessful and embarrassing coup detat. And now that Iran doesn't want to accept the dollar anymore there is talk in Washington of bombing Iran.

The Federal Reserve has no Audits.

So we need sound money.