For the U.S. economy Fiscal not Monetary Policy may be the Answer

Late in April of 2017 the United States Federal Reserve decided to abstain from enacting what was expected to be only the second rate increase in what has started out as an eventful year. The logic undergirding this lack of monetary exuberance was the current level of United States economic growth, or rather lack thereof. If the stated goal of the monetary policy of Janet Yellen’s Federal Reserve is to sustain an unprecedented period of Economic Growth in the country, while raising the value of the US currency, then In reality there is little which the Federal Reserve can do to effectuate the stated goals of this policy. There are very few monetary measures which will help to stimulate the sort of global appetite for United States equities which have not already been attempted, with varying degrees of success. The answer which the Fed, and indeed the Administration is looking for calls for a fresh, though not altogether novel approach to the current impasse. The most sound way of raising the monetary fortunes of the country, that is to say the value of the currency, would be to increase the amount of international demand for United States Equities and Direct Investment in the country. One example of the current Administration doing this is the recent trade agreement concluded between the United States and China. Though such an agreement runs counter to everything that the Administration was advocating during and immediately following the elections of 2016, such laissez faire economic policies have no doubt been greeted with arms wide open not only by United States manufacturers and investors, but also public and private entities throughout the World. Along with the cementing of trade relations as relates to the various points of contact which U.S. manufacturing and investors already have with China, this latest agreement also, as per reporting by Bloomberg Business News, also allows for the resumption of beef and cattle exports from the United States to China, something which hasn’t been accomplished since the mad cow disease scare of 2003. These integrative steps which will allow for a furthering of friendly ties between the two nations is exactly the sort of fiscal measures which the Administration can take which will build rapport with the international community for U.S. businesses, and raise the current value of the U.S. currency at the same time. This is not to say that I endorse an increase in interest rates from the monetary perspective. But rather just the opposite, If the United States hopes to continue the unprecedented run which the economy has taken, then it should look to fiscal rather than monetary policy an order to help it achieve its stated growth objectives.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s