Modern Monetary Policy

Introduction Globalization has made the world a global village and thus any country’s economy is affected both by its internal monetary policies and those of other countries it interacts with. Depending on the way these monetary policies are made they can work toward developing the economy of one country to the detriment of the others or promote economic growth in both the country where they are enacted and to other trading countries.Advertising We will write a custom essay sample on Modern Monetary Policy specifically for you for only $16.05 $11/page Learn More The United States of America has experienced economic expansion for a very long period (from 1990 to 2000) until the last half of the year 2000 when the country’s economy growth became slow and sluggish. In order to contain the slow growth and improve the economy of the country â€Å"the Federal Reserve between mid-1999 and May 2000 raised the target for the federal funds rate to 6  ½ % from 4 ¾ %†( Labonte Makinen 7). his did not auger well as the economy growth continued to decline and thus the policies had to be loosened in order to allow more production and spending for the economy to grow. Government policies that are aimed at controlling the supply of money in the market through the Central Bank make up monetary policies. In the legislation and enacting of monetary policies several bodies coordinate together in order to achieve an acceptable money supply as not only does it affect the country’s economy but also other countries economies, which trades with the United States of America. The major banks making policies in the United States of America are however two (both the nation’s Central Bank and the Federal Reserve). In relation to the United States of America, we can define monetary policies as those policies that â€Å"consist of the directives, policies, pronouncements, and actions of the Federal Reserve that affect aggreg ate demand or national spending† (Labonte Makinen 8). Monetary policies works at either increasing or decreasing the supply of the money in the market influencing how trade and spending goes on within a country. The only unfair characteristic of monetary policies is that they are short term in nature since their enactments are usually designed only to solve a short term crisis. In short the monetary policy tries to solve economic crisis and once the normal economic environment is regained the monetary policies are also adjusted to suit the situation.Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Monetary policies try to solve macro economic issues such as spending, income levels, unemployment, and inflation among other macroeconomic factors. Evidence showing monetary polices trends can be described by the fact that: Between January 3, 2001, and June 25, 2003, the target rate for fe deral funds was reduced to 1% from 6 ½%. This policy was reversed beginning June 30, 2004. In 17 equal increments of  ¼% ending on June 29, 2006, the target rate was raised to 5 ¼% from a base of 1%. No additional changes were made at the three subsequent meetings. (Labonte Makinen 4) In order to understand how monetary policies work it is advisable to understand its two indicators. Indicators of Monetary Policy Money Supply A common market rule is that when the supply of a commodity decreases its demand increases resulting in increased prices and the opposite happens when the supply is high the demand decreases thus driving the prices down. This same law also applies to the supply of the money in the market. Most of the times, monetary policies are described either as easy if in influences an increased money supply and tight if its main aim is to reduce the money supply. Interest Rates In his interest theory, John Maynard Keynes argued that interest rate is monetary phenomen a determined in the money market but not influenced by savings as classical economists used to argue. He argued that not all people who save that do so with an intention of earning interest thus it should be in the monetary market where funds are borrowed and their rates determined. Thus, changes in money supply (whether an increase or a decrease) leads to an increase or a decrease in the cost of the money. The changes in interest rates are important to the government as they influence spending in an economy thus creating or reducing employment. However, experts warn that the interest rates experienced due to the changes in aggregate demand and supply of the money are not the real market rates; the real market rates should be the existing market rates less inflation rates in the country. It is thus assumed that a high economic growth reduces interest rates in the short run. Given that countries have future expectations of how inflation rates will be the fall in market rates is alway s seen as a fall in the real interest rates. However, market rates can change for other reasons for example an increase in income increases the market interest rates thus increasing the demand for money since more people can afford the money and the public expects lower inflations in future (Schabert 17).Advertising We will write a custom essay sample on Modern Monetary Policy specifically for you for only $16.05 $11/page Learn More How the Monetary Policy Works Monetary policies works through the following instruments which either increases or decreases the supply of money in the market as it is explained below. Open Market Operations To increase or decrease the supply of money in the market, the Federal Reserve can engage in open market operations; this involves selling and buying of bonds in the market. When the federal Bank engages in selling the bonds or securities it aims at reducing the money supply in the market to avoid inflation of the money; the opposite occurs if the federal bank realizes that the money supply in the market is less as it repurchases the bonds and the securities thus making more money available in the market and this helps in ensuring that the commodity prices remain at a stable position by increasing both the money supply and the aggregate demand (Taylor 4). Reserves Deposit Requirement The government through the federal government can also increase or decrease the required reserve deposits that the commercial banks in the country deposits in the federal government in order to control an economic problem which may be brought about by the existing economic conditions. In order to reduce money supply in the market, the Federal Bank instructs the regional or commercial banks to increase their reserve requirements; this increases the amount of money withheld and in return reduces the amount of money which can be lend to the customers thus reducing the money supply. The lowering of the reserve deposit requi red in these banks by the Federal Bank works in the opposite way. In order to meet these Fed requirements, banks lend among themselves creating a multiplier effect and the rate on such loans determines how loose or tight the monetary policy at that time (Feinman, Deschler Hinkelmann 1). Discount Rate Federal Reserve lending rates to commercial banks are described as discount rates. An increase in the discount rate makes the cost of borrowing increase thus reducing the amount of money which the Federal Reserve can lend to the commercial banks within the state. The high interest rates are transferred down to the customers and the high rates discourage borrowing thus reducing the money supply in the market (U S Department of State 28).Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Interaction between Central Bank, the Treasury, and the Financial System The Central Bank is a special bank within the ministry of finance but independent from interference by the executive. The bank has the mandate to preserve financial stability and enhance financial development by controlling the money supply in the market. Its’ autonomy can be described in terms of; the ability to set the terms and conditions on the items in the central bank’s balance sheet – this is essential for the conduct of monetary policy; having the means to bear any losses that arise from central bank operations and having appropriate rules to allocate profits (including rules that govern the accumulation of capital and reserves); and the ability to cover operating expenses, and in particular to set salaries (typically the single largest component of operating costs) in a manner that allows the Central Bank to attract and retain the professional talent it requires (Boehm 59). There h ave been interactions between the treasury and the federal reserve board in an attempt by the government to overhaul the regulatory system but some Fed officials were seeing it as an attempt by the government to interfere with the independence of the bank and thus there was no way they could accept. They argue that the Fed was established by the congress thus it is not part of the executive thus interference should no be expected from the treasury (Torres Schmidt 1). The interaction between the central bank, the treasury, and the financial institutions is best described in the way the monetary policies work and the role played by each. Policy Proposals Relating to Reforming the Financial System One of the proposals being forwarded by the congress is that of establishing a new systemic risk regulator bearing in mind the country is just recovering from the economic crisis. The regulator is expected to supervise the growth of the financial institutions. There has also been the proposa l of changing how the Federal Bank functions. This has not augured well as it would curtail the independence of the Federal Bank and make it prone to political interference. While many think that this will work well in the long run it may work against the goals of making the financial institutions and monetary policies effective as political interests might be fulfilled to the expense of American citizens. There have been further proposals from the House and the Senate for the creation of a Risk Based Systemic Fund whose source would be from the institutions. While the policy might be good, it is not without a flaw since it fails to address the appropriate levels through which the financial institutions can be evaluated. Other proposals have been aimed at making stricter standards on capital and liquidity requirements among the most risky institutions. As the United States of America recovers from the economic crisis there have been calls to create or establish a mechanism through w hich failing financial institutions can be rescued before they can file into bankruptcy through receivership so as to reduce the uncertainties in the monetary system (Acharya, Cooley, Richardson, Ingo 16). Finally, the executive has had interests in controlling the actions of the Fed and thus they had been proposing for law reviews which would allow the central bank become the lead regulator for all the financial institutions (Torres Schmidt 1). Conclusion From the study we can conclude that monetary policies are ways through which the government regulates the supply of money in the bank and while the policies are good they are only enacted for short term purposes as the economy is never static. Thus, policies also need to evolve and should be legislated in a way that suits the prevailing economic conditions. Works Cited Acharya, Viral, Cooley F. Thomas; Richardson, Matthew., Ingo, Walter. â€Å"Real Time Solutions for US Financial Reform.† VoxEU.org, 2009. Web. Boehm, Mos er. â€Å"The Relationship between the Central Bank and the Government.† Bis, 2006. Web. Feinman, Joshua; Deschler Jana., Hinkelmann, Christoph. â€Å"Reserve Requirements: History, Current Practice, and Potential Reform.† Federalreserve, 1993. Web. Labonte, Marc., Makinen, Gail. â€Å"Monetary Policy: Current Policy and Conditions†. CRS Report for Congress. The Library of Congress, 2006. Schabert, Andreas. Money supply and the implementation of interest rate Targets: Working Paper Series. London: European Central Bank. 2005 Taylor, John. â€Å"Expectations, Open Market Operations, and Changes in the Federal Funds Rate.† Stanford University. 2001. Web. Torres, Craig., Schmidt Robert. â€Å"Fed Rejects Geithner Request for Study of Governance Structure.† Bloomberg, 2009. Web. U.S. Department of State. â€Å"Monetary and Fiscal Policy.† Countrystudies,  2010. This essay on Modern Monetary Policy was written and submitted by user Vivid Leech to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here.

Fiber Communication essays

Fiber Communication essays Fiber communications research mainly deals with the relationship among system architecture, technology and applications. Current activities have included sub-carrier multiplexing and coding techniques for raising the bit rate limitations of multimode fiber systems; new modulation techniques to offset the effects of dispersion and non-linearity in long distance systems; and architectures for survivable communications. Problems concerned with broadband access and interfaces between fiber systems and wireless are given specific attention at present. (Communications) The finest way to surmount distance limitations presented by copper cabling is to deploy fiber. Fiber offers many benefits to Ethernet and Fast Ethernet networks. Surmounting the restrictions of coaxial and twisted-pair copper These distances can be increased to 2,000 meters by multimode fiber and to five kilometers by single-mode fibers in half-duplex environments, and much more extension is possible in full-duplex installations. But, fiber-optic cabling is not a universal remedy. Cost of termination is one of its most important challenges. To protect the optical characteristics, splices and connections must be cautiously cut and then polished to satisfy the need for perfect connections. Legacy equipment and some critical networking equipment does not give a fiber interface is the second problem. Those that give are prohibitively expensive. Fiber can be connected to almost any legacy environment, desktop computer or networking equipment, by using copper-to-fiber media converters. The distance problems existing in copper can be prevailed over by fiber runs between the media converters and the chassis. (Media converters troubleshoot network: technology gives Internet access provider flexibility, p.45) For next generation ...

John Miltons use of the pastoral in his poem Lycidas, transforms a Essay

John Miltons use of the pastoral in his poem Lycidas, transforms a work of mourning into a work of spiritual consolation and additionally, how Lycidas addresses the corruption of the English church - Essay Example What is the connection between a pastoral elegy and the corrupt clergy? Seemingly nothing! But to establish connectivity is the art of the skillful poet like Milton. The church has ‘vested interest’ in any death as it is considered as an act of God. In case of premature deaths, the questions addressed by the near and dear ones of the dead individual are intriguing. The clergy of the Church has to defend such unfortunate incidents with great skill. Milton saw his opportunity to test his poetic skill and to take to task the corrupt clergy of the time. Thus the pastoral elegy of â€Å"Lycidas† was born in which a shepherd mourns the death of a fellow shepherd. By using this limited platform, the poet reaches out to the bigger issues that confront the society and which have engulfed the administration of Churches. John Milton’s use of the pastoral in his poem â€Å"Lycidas†, transforms a work of mourning into a work of spiritual consolation and additiona lly, how â€Å"Lycida† addresses the corruption of the English church. A poet may be intelligent. He may seem impartial in articulating his views on a given subject. But no poet will be able to sweep under the carpet one’s strong thinking on the issues that confront the society during his time and Milton succumbs to this temptation, and rightly so. Thus â€Å"Lycidas† serves the purpose of a historical document as for the goings on in the Christian Church during the time of Milton and thus it is the gold-mine for researchers of many subjects, and the mirror that reflects the cultural traditions of the era. 1. Mark Womack writes, â€Å"Lycidas exemplifies such daredevil greatness on several levels. The poem employs patterns of structure, prosody, and imagery to maintain a dynamic coherence.†(120) He further adds, â€Å"Much of the value of this poem lies in the undeniable sense of consolation it provides in the face of death.†(134)By naming his deceased fellow Cambridge classmate,

Compare and contrast the consequences of World Wars 1 and 2 for the Essay

Compare and contrast the consequences of World Wars 1 and 2 for the United States and its citizens - Essay Example The overall losses incurred by US as a result of its involvement in war were however, small as compared to the massive destruction faced by Europe. One of the most important consequences of the World War 1 was the increase in military posture of America in the world. Over the period of the war, US established itself as one of the suppliers of military equipment to the allies and established itself as one of the emerging manufacturing economy of the world. War also resulted into massive transfer of wealth from Europe to America as US not only provided equipment and military support but also offered loans. As a result of this, American economy got a boost as transfer of wealth has resulted into increased revenue for the government and also created jobs. At the social level, for Americans, war however, brought significant racial differences and social divisions. German Americans were harassed as well as racial tension gripped specially the migration of Southern Blacks. On home front, World War 1 therefore was something which further highlighted the differences between Americans within American society. Overall economic progressed was witnessed by the Americans as farmers put in more and more acreage to the use of the crops which were being readily sold. Gross farm income increased and as a result of this, the overall prosperity increased for ordinary Americans despite the fact that War has also brought losses in terms of shifting most of the government resources to the war. Though Second World War was fought far from the American borders but it believed to have created more lasting impacts on the American society as compared to the impact First World War had. In terms of the overall impact, second Great War had more serious and far reaching consequences for US. It is important to note that US was largely unprepared for Second World War and was forced to enter into the war when it was attacked by Japan. In first

The Companions Are the Source of Much Grief for Odysseus Essay Example for Free

The Companions Are the Source of Much Grief for Odysseus Essay Odysseus, the strong, courageous, dedicated hero, travelled for miles on end to return to his home land of Ithica and to bring with him the twelve fleet ships carrying his loyal companions. However throughout this epic poem Odysseus’ companions have been the bearers of much grief for Odysseus, in many ways from questioning his leadership to simply dying in battle. And slowly during this epic poem each of his twelve fleet ships has been struck down. The stories of Odysseus’ companions begin from the very opening of book nine, on the coast of Ismarus home to the Cicones. Odysseus and his men â€Å"sacked the place and destroyed its men folk† after taking their women and their vast spoils, Odysseus warned his men to dispatch with haste. But they were not quick minded enough, and a tremendous battle broke out between Odysseus and his men and the Cicones. Seventy two of Odysseus’ men were brutally killed. We can see here that this would cause much grief for Odysseus and his remaining companions, for his men had made it through the battle of Troy and where rejoicing to be returning home to Ithica, now he would have to return to grieving families awaiting their heroes return and for some, now their hero’s would never return. This is a classic example of the kind of grief Odysseus feels throughout the epic poem, because this is how many of his companions have presented Odysseus with grief, through death. Whether it was falling in battle or devoured by a monstrous creature. For instance when, Odysseus and his remaining companions sailed to the island of the Cyclopes, where with twelve companions, he entered the cave of the Cyclops Polyphemus. This giant devoured, one after another, six of the companions of Odysseus, and kept Odysseus and his other men as prisoners in his cave. Witnessing their loyal companion’s cannibalistic murders right in front of them Odysseus and his men â€Å"wept and raised their hands to Zeus in horror.† This again must have made Odysseus overridden with grief for not only did he watch his men be killed but he was the one that led them to this ferocious one eyed monster. Again he has lost more of his men which means more grieving families; at home in Ithica questioning the Gods for the death of their loved ones. However, death is not the only way that Odysseus is exposed to grief some of the monsters that Odysseus and his followers encountered would not kill his men but simply make them forget all longing for home, and the nostros that they were feeling. One of these monsters would be the Lotus-eaters, â€Å"a race that eat the flowery lotus fruit.† Some of his companions were so much delighted with the taste of this flower that they wanted to remain with the Lotus-eaters and think no more of Ithica. This must have caused much anguish for Odysseus as he did not know how to help his compelled comrades. But being the intelligent and strong hero he is he â€Å"used force to bring them back to the hollow ships, and they wept on the way† but once on board he tied them up and continued with his voyage. The sirens also allow men to forget their home for with their beautiful voices would sing bewitching songs to drive these men to their death. Luckily with the help of Circe the sorceress who told Odysseus that if he wanted to hear the sirens song and live that he should allow his men to tie him to the mast of his ship while they covered their ears with softened bees wax and steer the boat onward while Odysseus listened. Odysseus, in the epic poem has also encountered Companions that have questioned and mistrusted his leadership; this is that of Odysseus’ second in command of Odysseus’ ship during the voyage back to Ithica after the Trojan War his name was Eurylochus. In the Odyssey he is portrayed as an unpleasant, cowardly individual who undermines Odysseus and stirs up trouble. When Odysseus and his men arrive on the island of Aeaea home to Circe Eurylochus is chosen to lead a group of twenty-two men to explore the island. While touring the island they see Circe’s house and all but Eurylochus enters, he himself suspects Circe’s trap and when the men are turned into pigs he runs back to warn Odysseus. Odysseus prepares himself to confront this witch and save his crew however Eurylochus refuses to guide him to Circe’s palace and urges Odysseus to escape and leave the men to their fate. This must have caused an uncountable amount of grief and pain for Odysseus for Eurylochus was his second in command, Odysseus therefore must have trusted this man with his life and thought rather highly of him. Then for him to tell him to abandon his loyal companions who have been there for him since Troy and save himself must have hurt Odysseus a great deal. After Odysseus returns from Circe’s palace having rescued his companions, Eurylochus insults Odysseus and threatens to kill him. Here we see Odysseus being befriended and almost killed by his second in command obviously causing much grief for our brave hero. Overall I feel that the companions are the source of much grief for our fearless hero. However most of them did not wish to bring grief upon their leader. For most it was simply an unfortunate death leading to Odysseus grieving for the loss of them.

John Alexander Macdonald: A Good Role Model? :: essays research papers

John Alexander Macdonald: A Good Role Model? A role model can be looked up upon and imitated. Many would argue that Sir John A. Macdonald is not someone of this stature, but I have different opinions about him. By studying some books about him I concluded that this humble man is someone who deserves to be known as a good role model. Here are some reasons to why. It is John A. Macdonald's outstanding qualities that made him a upright leader. He won the hearts of people because he could relate to them and their problems. Showing humility, Mr. Macdonald considered himself as one of them*. And his devotion to helping these people is shown by his life course, to which even his opponents admitted "there does not exist in Canada a man who has given more of his time--more of his heart--more of his wealth or more of his intellect and power, such as they may be, for the good of the Dominion of Canada." Yes, we can say that the first Prime Minister was very devoted to Canada and her people, and helped direct Canada to become what it is now. John A. Macdonald became well known for the way he treated people. He was kind and courteous. And because of his humor and consideration of others, people enjoyed being around the Prime Minister. He left a good impression on the people of Canada because he cared for not only the English, but also the French and Natives. One example is when he visited the Council House of the Six Nation Indians near Brantford. Mr. Macdonald met more than thirty farmers and after only thirty minutes of chatting with them he knew them all by name# . In another instance, a guest of John A. Macdonald was so impressed with the hospitality he received that he described him as "courteous in his social relations--a very prince". In both cases he made those involved feel noticed and cared for. The most prominent attribute that makes John A. Macdonald a good role model is his honesty. In comparison to all of the politicians, he is by far one of the most honest Prime Ministers. Although he was not perfectly honest as shown in the Pacific Scandal, he rarely made promises that weren't fulfilled. The people recognized this and showed their appreciation by continuing to support him till

Should Obese People Pay Higher Health Insurance Premiums?

Writing Assignment #3: Should obese people pay higher health insurance premiums than people who are not obese? – Rishard Rheyas Obesity has become a serious problem with more than one third of adults being obese in the United States. Obesity is seen as a self-destructive behavior accompanied with smoking and use of other drugs thus, government officials and other business bureaucrats expressed the need to impose higher health insurance premiums on the obese.Obesity is not always due to the personal behavior of people and can be linked with the environment and genetics; I personally feel that obese people should not pay a higher health insurance premium compared to those that aren’t. Government officials and other business bureaucrats expect that raising the health insurance premiums for the obese would help reduce the mortality and overall health of the country however according to a study, individuals with lower BMIs tend to associate themselves with less favorable hea lth conditions and mortality rates as compared to those with high BMIs.The body mass index (BMI) assesses one’s body weight relative to height. The weight in kilograms is divided by height in meters squared (kg/m^2). It correlates highly with body fat in most people hence is a useful, indirect measure of body composition. According to research carried out by the Centers for Disease Control and Prevention (CDC), with increasing weight the risk of diseases also increases including cancer, stroke, coronary heart disease etc. A BMI between 25. 0 and 30. 0 is defined to be â€Å"overweight† and a BMI of over 30. is defined to as â€Å"obesity† (30 or more pounds overweight). Overweight and obesity result form an energy imbalance which involves consuming too many calories as compared to the amount of physical activity one does. The question lies on whether this issue is mainly because of psychological factor beyond an individual’s control or personal choices ma de by the obese individual. Genetics and the environment do play a huge role in this however it also deals with the personal choices made by that particular individual.David Zinckenko argues in his article â€Å"don’t blame the eater†, that it is a matter of personal responsibility but can sympathize with the obese individuals as there is a lack of alternatives and information regarding fast food consumption. Society in the United States has raised concern about healthy diets, providing alternatives sources of food but unfortunately at a cost. The increased cost for a healthy diet dissuades teenagers from eating healthier food thus without a change of environment it can result in a lifetime of obesity. David Zinckenko briefly brings in the comparison with the automobile industry.The automobile insurance is significantly high for most high end vehicles and also for the younger generation. This is mainly because the higher end vehicles have a certain type of brand value and reputation as with certain big health insurance companies. The youth are charged higher automobile insurance as they are more prone to accidents as suggested with smokers and obese individuals with diseases. The government and other respective officials imposing this would mean that obesity is termed a disease which would force individuals to try to become thinner.This could lead to dangerous diseases such as anorexia. The difference is mainly because health insurance has a closer link to our economy and human life as compared to automobile insurance. Individuals should be given rights to decide what they would like as with the automobile insurance wherein individuals choose a higher end car thus pay a greater insurance. With regard to obesity, this increase in health insurance would not give individuals a choice but force them into a system of hardship.Judt claims that throughout the middle decades of the Twentieth Century society as a whole guaranteed certain rights for citize ns without questioning the motivations or the morality of citizens. There has been increased support for self responsibility and reduced expectations for â€Å"handouts† from the state since the 1980s. The current proposition to raise the insurance premiums for the obese questions the morality of the government officials involved as it forces individuals to change in order to fit into a certain framework of expectation.This is unfair and it deprives individuals of their freedom and rights to choose their way of life. Concerns regarding the health issue of obesity are justifiable however this type of proposition appears to be harsh and presumptuous. It comes down to the issue of state responsibility versus individual responsibility. The current issue at hand dealing with obesity is part of the state’s responsibility but is more about personal individual responsibility. The state should provide cheaper and healthy alternatives as one of the major reasons for obesity is d aily life.David Leonhardt argues that personal responsibility has become more complicated as our environment has changed. The present environment involves us prioritizing our work more than our health or anything else hence we become more unhealthy and obese. The solution to this is suggested to be beyond the control of an individual, if people want to become successful they need to work hard most of the time and that requires people choosing a certain type of lifestyle.Imposing higher insurance premiums would also be unfair to the obese as most obese individuals tend to earn less than their less obese counterparts. This increase in insurance would mean that individuals would have to lose their freedom and rights whilst suffering even more hardships trying to pay the health insurance. Controlling obesity can be done by implementing more healthy affordable alternatives and controlling the work environment rather than imposing higher insurance premiums and compromise on freedom.