Monetary Policy: The Gas and the Brakes
In This Chapter
• How monetary policy is applied in practice
• How to become a skilled Fed watcher
• A look at the Fed’s record
With a clear understanding of money and how it fuels the economy and of the Federal Reserve System and how it influences the growth of the money supply, you are prepared to see monetary policy in action. As I’ve mentioned, the Fed can implement monetary policy far more quickly than the president and Congress can agree on the budgetary provisions that constitute fiscal policy. So it’s an extremely useful tool. In addition, the financial markets monitor every move the Fed makes (or chooses not to make), and they often respond even more rapidly to monetary policy ...