Monetary Policy and Inflation

Paper Summary:

This paper contends that the US Federal Reserve has been ineffective at using its available tools to counteract the country's economic problems and bring the US economy to normalcy. Specifically, the paper explains the reasons why recent monetary policy has been a mistake and will result in the deterioration of the economy rather than an improvement. The paper focuses on the Fed's recent interest rate hike.

Outline:
Introduction
Statement
Discussion
Conclusion

From the Paper:

"Not long before the Federal Reserve has been able to sense a change in the inflation patterns, it now faces another bout of problems. According to Richard Clarida of Wall Street Journal "Several weeks ago, Alan Greenspan stirred up the bond market by opining that the then-low level of bond yields -- in tandem with strong growth, $50 oil and a succession of Fed rate hikes since June -- represented a "conundrum." The implications of the conundrum according to Clarida are grave as it indicates that there is more at stake than merely interest rates."

Sample of Sources Used:

• Clarida, Richard. Our Post-Bubble World. Wall Street Journal. (Eastern edition). New York, N.Y.: Apr 11, 2005. pg. A.21
• Conducting Monetary Policy, The Federal Reserve Bank of St. Louis. Accessed on 26-4-2005 from: http://www.stlouisfed.org/publications/pleng/monetary_policy.html
• Cooper, James C. & Kathleen Madigan. U.S.: Inflation Is Back On The Fed's Radar. Business Week. New York: Apr 4, 2005., Iss. 3927; pg. 29
• Miller, Rich. The Fed May Be Talking Too Freely. Business Week. New York: Apr 4, 2005., Iss. 3927; pg. 36
• Testimony of Chairman Alan Greenspan, Federal Reserve Board's semiannual Monetary Policy Report to the Congress Before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate February 16, 2005. Accessed on 26-4-2005 from: http://www.federalreserve.gov/boarddocs/hh/2005/february/testimony.htm

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