The Federal Reserve has a difficult job: they can slow or quicken the economic growth of the United States and impact the global market in doing so. In the past, I have never given much thought to The Federal Reserve. If someone asked me what they did or how they did it, I would not have an answer for them. Wheelan broadened my narrow view of the work they do and how much power they retain. He brought up a good summation I appreciate, "Monetary policy is tricky business. Done right, it facilitates economic growth and cushions the economy from shocks that might otherwise wreak havoc. Done wrong, it can cause pain and misery"(242) which brings me to my next revelation: Interest Rates. I have heard of interest rates and have a very basic understanding of how they work and what they impact, but again Wheelan helped me to understand the concept better. The Federal Reserve uses interest rates to regulate the economy. If it is growing too quickly, they increase rates and the reverse is also true. The more out of hand the economy gets, the more painful it is to bring it back to a good rate. Paraphrasing Wheelan, he compares the economy to taking away the punch bowl from a party that's just gotten started. Yes, it's annoying to some, but the idea of the future has to be taken into account. Obviously no host would take the punch bowl away from a party that just began, but the basic idea still applies on a greater scale. With a private party, you have a certain number of people that attend and you know who they are, what their values are, and how they behave in advance. Now take that party and magnify it to approximately 316,148,990 people you don't know. They all spend differently, act differently, and make right and wrong decisions. You cannot control who attends the party and that's the problem The Federal Reserve must face.
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