U.S Monetary Policy In 1995
When Alan Greenspan presented the Federal Reserve's semi-annual report
on monetary policy to the Subcommittee on Domestic and International Monetary
Policy, the Committee on Banking and Financial Services, and the U.S. House of
Representatives on February, Dr. Greenspan touted a cautionary yet favorable
view of the U.S. economy. He states that "With inflationary pressures
apparently receding, the previous degree of restraint in monetary policy was no
longer deemed necessary, and the FOMC consequently implemented a small reduction
in reserve market pressures last July." (Greenspan, 1996, Speech)
During the Summer and Fall of 1995, the economy experienced a
strengthening of ...
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and incomes." (Greenspan, 1996, Speech)
Towards the end of the year, the economy showed signs of slowing.
Fearing a prolonged slowdown or even a recession in the economy, and with
inflationary expectations waning, Chairman Greenspan and the Federal Reserve cut
rates again in December. (Greenspan, 1996, Speech)
There are, of course, critics of 1995's monetary policy. Most of the
criticism came in the early part of 1995 when the Fed raised rates again.
In the article "Are We Losing Altitude Too Fast" from the May 1, 1995
issue of Time magazine written by John Greenwald, he explains that the economy
might not be coming in for a "soft landing" like the fed predicts. Trying to
sustain 2 to 3 percent growth might lead us into a recession. Mr. Greenwald
explains how the Fed's actions in 1994 and early 1995 has hurt individuals and
the economy as a whole. "Corporate layoffs are far from over," says Greenwald,
"they generally accelerate when firms find themselves in an ...
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that the economy was on the upswing, but cut rates anyway to try to ensure
his reappointment come March 1996. Dr. Evans claims that vice-Chairman Alan
Blinder also knew of the recovery but "he could not face his collegues at
Princeton when he returned, unless he pushed for a rate cut." (Evans, Industry
Week, Aug. 21, 1995. p122)
Dr. Evans concludes that the Fed's actions in July were "purposely
misleading, cravenly political, and just plain stupid." (Evans, Industry Week,
Aug. 21, 1995. p122)
Many people applauded the actions of the Fed in 1995, and defend them
from the rampant "fed-bashing".
One of the defenders of the Fed's monetary policy and Alan Greenspan is
Rob Norton who wrote ...
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"U.S Monetary Policy In 1995." Essayworld.com. April 2, 2006. Accessed November 22, 2024. http://www.essayworld.com/essays/U-S-Monetary-Policy-In-1995/43728.
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