You Decide Gm 545

Dear Mr. President,

Due to the current severe and deep recession the economy is experiencing, I would like to suggest a combination of ideas that I believe could aid in stabilizing the economy. Economic analysts are predicting that recessionary conditions may persist for at least another year. The economy requires some government intervention to put it back on track. According to inflation, prices falling and the unemployment rate rising. The combination of both monetary and fiscal policy will be needed in order to bring the nation out of this severe recession.

The Economic Consultant Mr. Raymond Burke, has recommended that the President lower interest rates to further help businesses and consumers “get back on their feet.” There are some inaccuracies in what Mr. Burke is recommending. The President has neither the ability nor the authority to make adjustments to interest rates. The Federal Reserve is responsible for the discount rate and for setting the reserve requirements.

I do not agree with Ms. Patricia Lopez’s (Consultant to the Federal Reserve) recommendation to leave interest rates alone, sell bonds and raise the bank reserve. Raising the bank reserve will discourage banks from lending, which prevents businesses from expanding operations or from consumers from obtaining loans to purchase goods.

I agree with Kathy Lee, the Former Economic Advisor to the President, whose approach is to raise taxes and reduce government spending. Certainly this is a conservative approach and deserves some consideration in balancing the budget. Although, raising taxes will decrease the spending power of the people. For the short term taxes should be left as they are or temporarily decreased to put the money back in the hands of the people to help to increase aggregate demand.

I disagree with Ms. Allison Tanney (Economic Consultant to the President) that the President should work with Congress to increase government spending and lowering taxes. The Federal Reserve Board...