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Monetary/Fiscal Policy
Government monetary and fiscal policies change all the time. These policies are
installed or fixed for the betterment of trade, inflation, unemployment, the
budget, or many other economic factors. In my opinion, it seems like two people
have the majority of the control when it comes to forming these policies. The
first person who influences these policies is President Bill Clinton who
proposes tax cuts, to balance the budget (Clinton's budget proposal should be
given to congress soon), minimum wage increases, or other legislation to improve
the economy. The second person who influences policy is the Federal Reserve
Board Chairman Alan Greenspan who can truly destroy our economy by a slight
miscalculation. Greenspan is so influential that the mere speculation of his
making a move can cause panic buying or selling in the open markets. Alan
Greenspan has the power to increase or decrease the money supply by changing
reserve requirements, by changing the discount rate, or by buying or selling U.S.
Securities over the open market.
The major governmental problem is trying to balance the budget. The United
States government is currently in debt $5,262,697,717,000 as of February 7. This
number grows about $10,000 per second(see charts 2,3,and 7). President Clinton,
Chairman Greenspan, and Congress are all working towards a balanced budget by
the year 2002. As many economists explain , the need is for legislation to keep
the budget balanced for years to come and not look for a quick fix to balance
the budget for only a few months to quiet critics. The government takes step ...