Econyd

Our issue is that we have fallen into a recession that will last for at least another year because unemployment is on the rise, inflation is below 0% and prices are falling. As Raymond Burke stated, we first need to decide which fiscal and monetary policies we will use to fight unemployment, inflation and boost the economy again. He suggested lowering interest rates to help businesses and consumers get back on their feet. Lowering interest rates can increase the money supply because their will be more available income which can cause an increase in demand. It causes mortgage rates to decline, consumers to borrow and spend, and businesses to grow. But lowering interest rates will not make people spend money, even if the interest rate is below 0%, as it is right now. People and businesses can still decide to hold on to their money. Because of the recession, deficit financing has to be corrected as Kathy Lee stated. Decreasing government spending will not help boost the economy, the government needs to put funds into the economy to create jobs and increase demand for goods. This will make tax revenue increase naturally and this money can be used to pay and reduce the budget deficit. Intentionally raising taxes can slow the economy, increase unemployment and reduce buyers and sellers from spending. Selling bonds and raising the reserve requirement as Patricia Lopez suggested will decrease the money supply and not help boost the economy, it drains money from the economy. Allison Tanney made some great suggestions to use a combination of both expansionary monetary policy and expansionary fiscal policy. Increasing the money supply by buying bonds, lowering taxes and increasing government spending will all help pump money into the economy and stimulate economic activity. I don't agree with Allison on raising interest rates or raising the reserve requirement, it would discourage people from spending money or applying for loans, which in turn will slow down the economy....