U.S. Monetary Policy and International Implications Essay

U.S. Monetary Policy and International Implications - Essay Examplee economy is growing seems insufficient to initiate and sustain considerably large up-gradation in the current vocation market, the FOMC has decided to take measures and modify its financial policies to bring significant changes in the purpose levels. The rate of unemployment has been preserve at a high 7.8 percent in 2012, which is much higher than the projections made by analysts as the normal level of unemployment in the long run (Bernanke). There is a large level of economic crisis in resources in the U.S. and it is being persistently maintained with high margins. This supports the restrained rates of inflation in the U.S. although there are short limit fluctuations in footings of goods and services in the economy. Consumer price inflation at present shows lower than the expected level that is required to achieve the long run objective of 2 percent as set by the Federal Reserve (Press Release). Federal Reser ves Recent Policy Actions The fiscal policy strategies of the Federal Reserve are steered by the dual mandate of promoting maximum level of employment and achieving stability in prices (Mayer 184). With the inadequate progress found in the US job markets coupled with diffused inflationary pressures, the Federal Open Market deputation (FOMC) has taken certain important actions in 2012 with the get under ones skin of providing additional policy accommodation (Bernanke). In September of 2012 information collected from reliable sources continued to allow out weak signals regarding labor markets. There were also no sign of noteworthy inflation pressures. This bring on the FOMC to take additional steps for making provisions of policy accommodation. The span of time over which the FOMC has unploughed its expectations to maintain exceptionally low levels of the federal funds rate (Bernanke) has... This essay stresses that while the asset grease ones palms program of the FOMC is aime d at incr mitigation employment levels and break job market conditions along with stabilizing the price of commodities in the U.S. economy, this policy action also has certain significant negative impacts. In my opinion, although the quantitative easing puts a positive influence on the economic performance of the country, the government has to increase subsidy on labor wages and increase demand for labor by the producers. An increase in wages would improve demand conditions in the economy which would increase productivity levels. While improving demand conditions in the economy, this form would take care of the problem of excess liquidity in the economy.This paper makes a conclusion that composite views have been provided in the debate revolving around the asset purchasing by the FOMC. In terms of qualification of the quantitative easing program, most of the members of the Committee have agreed that this policy creates a meaningful conduct by easing financial circumstances ther eby accelerating the process of economic growth. According to these observers, less credence constraints and lower rates of interest would increase investment by investors. On the other hand, some members of the Committee consider this policy as having a diminishing impact on the economic condition of the country. This is because quantitative easing lessens the financial stress in the short term, but, no consensus has yet been reached with regard to the long term effects of the assets purchasing policy.