Sunday, March 14, 2010
Federal Reserve's Target
The Federal Reserve is as complicated and hidden as organizations get. They are assigned the task of conducting Monetary Policy, and this action works best in the dark. Just like any other economic agent the Fed is challenged with trade-offs. They often have to decide between unemployment and inflation. Fighting the latter is a trademark of the previous three Federal Reserve chairmen. This article talks about how the vice chair of the Federal Reserve nominee will fight the unemployment problem. Lets hope that trade-off does not become a crucial decision faced by the Fed anytime soon.
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Obama would be making the right choice by nominating Janet Yellen for Vice Chair of the Federal Reserve. Attacking the unemployment issue is of higher importance right now than rising inflation. The unemployment rate right now is "unacceptably high' as Yellen said, and trying new ways to create and keep jobs should be something the Federal Reserve should be highly concerned about. If the last three Federal Reserve chairmen all put a larger focus on inflation, it is time to try something new.
ReplyDeleteI agree with Autumn. I think attacking unemployment is worth a try, as opposed to inlation as has been done in the past. It would be harder to attack both unemployment and inflation at the same time, so it seems a choice must be made. Unemployment rates are still too high and even though we are technically out of the recession, that does not mean we are where we should be and we should stop correcting unemployment/inflation. Yellen seems to understand that. Although fighting high unemployment won't solve all America's problems, it is a start. Maybe once unemployment goes down we can start to tackle inflation again.
ReplyDeleteI'm still not buying anything. Talking about fighting unemployment vs. inflation. Sounds to me like another case of who do you fight, the drug addicts or the drug dealers. What I could use is an economist, maybe even an economy textbook, to graph the whole situation out for me. These crazy issues always take time to resolve. It takes a while to reach an equilibrium. If the last three guys all battled inflation, maybe they were on to something. You know, if one person jumps off a bridge, you usually don't see two more people following him. "Unemployment" just carries such crazy connotations these days that everybody is jumping on the band wagon. It's probably an easy problem to solve. I wish somebody would ask George Diemer what he thinks. He could probably solve the problem with his old supply and demand chart. Hand the guy a piece of chalk and let him go to town.
ReplyDeleteI think that President Obama is making a positve choice. Unemployment rates are skyhigh and i think we should do whatever we have to do to bounce back!
ReplyDeleteHaving read the article, I think that although it is important to keep the inflation at a low level for the economy, the unemployment rate right now has been increasingly bad (as what you've shown us in class with the demographic red marks) that should not be disregarded. Since the other three former vice chair's were focusing more on the inflation, Yellen's proposal on solving to reduce our high unemployment rate might be worth a shot! I also think she has a good qualification for the position considering she has worked long for fed.
ReplyDeleteBoth the issues of inflation and unemployment need to be resolved but as of now, either has been dealt with in a manner that has made a difference. Three former VP's have tried and they have not succeeded in a way that has made a positive difference. Maybe if Yellen can make a substantial difference in the number of unemployed it would boost the economy and help solve the inflation problem. Either way, our country needs help and so far we have not seen anything that has shown us success yet. I am in favor of Obama's picks and have faith in them that their new approaches to this dilemma will help our economy.
ReplyDeleteBoth the issues of inflation and unemployment need to be resolved but as of now, either has been dealt with in a manner that has made a difference. Three former VP's have tried and they have not succeeded in a way that has made a positive difference. Maybe if Yellen can make a substantial difference in the number of unemployed it would boost the economy and help solve the inflation problem. Either way, our country needs help and so far we have not seen anything that has shown us success yet. I am in favor of Obama's picks and have faith in them that their new approaches to this dilemma will help our economy.
ReplyDeleteHaving read the attached article i feel the main concern of the government should be to fight unemployment. By fighting unemployment rather then inflation, the government can keep interest rates fairly low which can create growth in our economy and allow people to make investments, transactions and loans easier, which also contributes to growth. If the feds try to tackle the inflation problem and keep it low, they would have to increase interest rates which would further harm our already fragile economy. The sensible thing to do would create more job opportunities by fighting unemployment. In the process, you keep interest rates low so substantial growth can occur.
ReplyDeleteI think it would be a smart move for Obama to nominate Janet Yellen for Vice Chair of the Federal Reserve. I like that she would be focusing on the unemployment rate instead of the inflation. Both issues are important but right now unemployment takes the lead. By lowering the unemployment rate we will certainly not solve all the problems in the American economy but it is a step in the right direction. Inflation has been attacked in the past by the Federal reserve chairman and it hasn't worked than why don't we try to learn from our mistakes and try focusing on unemployment. Like Julia said maybe if the unemployment gets under control it can help to control the inflation.
ReplyDeleteFrom what the article states, I believe that Yellen would be the correct choice for Vice Chair of the Federal Reserve. Her experience and concerns are what need right now. The high unemployment rate is what needs to be taken care of and that is her main concern. With lowering the unemployment rate that is getting the economy a step closer to where it needs to be. Hopefully lowering the employment rate will help other issues in the economy like the inflation issue and housing crisis.
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