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Unformatted text preview: Michael Samuels 4/4/10 Wilson Paper 2 Monetary Policy The ever-changing financial systems and macroeconomic factors allow for a constant debate over monetary policies in the United States and around the world. Over the last 30 years the way governments have tackled inflation, interest rate, and price issues has evolved just as much as other technologies such as televisions or automobiles have. As more and more research was conducted economists slowly changed their perspective on monetary policy. The United States experienced huge swings in inflation and price level which for people living the US created a problems in their everyday life as the value of their money changed so dramatically. In today’s economy, things are very different than they were since the Federal Reserve Board, the leading force in economic policy, was created. Today’s policies present much fewer economic swings, and more stable prices. Evaluating monetary policies have become much easier to understand and more public in nature. With the gold standard increasing becoming obsolete due to the lack of necessary supply of gold, and subsequently the US government abolished this method of currency valuation on August 15, 1971 at the Bretton Wood conference. With the US dollar no longer being supported in a pegged system it had to now stand on its own. In order for this to succeed additional government intervention was necessary to protect the strength of the dollar thus modern day monetary policy was born. One of the initial changes, and something that has increasingly become more important, was the public announcing of interest rates. The lack of transparency has always plagued the financial markets, including the recent sub-prime mortgage, and with...
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This note was uploaded on 10/20/2010 for the course FINA 127 taught by Professor Arthurj.wilson during the Spring '10 term at GWU.
- Spring '10