Inside the Federal Reserve - 550 Words

Inside the Federal Reserve (Article Sample) Content: Inside the Federal Reserve Name Institutional Affiliation  Inside the Federal Reserve The first implication of the theory â€Å"Money for Nothing: Inside the Federal Reserve† by Jim Bruce is controlling the interest rates. Bruce argues that reducing the interest rates will make more people request loans from the banks thus increasing money supply in the economy (Michael, 2013). He is aware that when there is supply of more money in the United States economy, it will result in inflation. It is, therefore, evident that Bruce is after increasing the interest rates of borrowing in Federal Reserve. The financial crisis that exists or that seems evident has been contributed by the Greenspan’s monetary policy. This policy supported full employment, which is the second implication theory that is making the Federal Reserve to use more money to pay wages. From the movie, it is evident that the Federal Reserve releases more money to the economy more than it collects, which further accelerates the rate of the economy turning poor. The Federal Reserve has, therefore, failed in its role of reducing the money supply by implementing some policies to collect money. The third implication theory from the film is borrow-and-spend policy, which has contributed to a bad economy. The misguided advocacy of Federal Reserve came from the Greenspan and did not focus on the result of increase in money supply in the economy. Fed focused much on the effect of borrowing and spending of money to the public without considering the consequences of the same to the economy. That is the reason why the blame for the imbalance in the economy lies on Fed. The fourth implication theory is that there were less savings and investments, which is implicated by the title ‘money for nothing.’ From the film, it is evident that in the United States, economy very little is saved from the public and fewer investments are made. What might bring th e money back to the Federal Reserve according to Bruce is savings and investments. If the money that was borrowed was invested, the economy would have grown and the financial crisis would have been evaded. This indicates that money is disconnected from its underlying value. The last implication theory from the film is the move by Federal Reserve to implement the gas pedal and the brakes to the economy of the United States by decreasing money supply. This move will be enhanced by the Federal Reserve to dictate the lending rates to the commercial financial institutions to discourage people from borrowing money. The lending rates are raised where people go for less loans, and the economy is seen to somehow change. Only Fed can play a significant role towards improving the economy of the United States. My first opinion regarding the role of Federal Reserve is that it should raise the lending interests. It should apply this measure to the commercial banks so that many people are disco uraged from borrowing loans (Thomas, 2015). This will ensure that those who had previously borrowed loans repay fast before it accumulates beyond the level they can service. The Federal Reserve should set...