Chapter 16 - The Influence of Monetary and Fiscal Policy on Aggregate Demand

 This chapter talks about appropriate monetary and fiscal policies to affect the economy.  Spring and summer of 2020 we watched both in action.  What were the FRB's actions in their attempts to lessen the affect of Covid-19 on the economy? Were they successful? How about the federal government? Were they useful?  Do you agree with the actions taken by the FRB and the Federal government? Why or why not?  What are the risks associated with their policies?

(There are a lot of questions here and this really is the meat of the course.  I will give up to 10 points for exceptional responses.)

The Fed and the federal government both have acted to help with the extraordinary circumstances from the effects of COVID-19 and its effect on local, state, federal, and global markets and economies. One of the programs from the Fed is the Main Street Lending Program. This provided credit to small and medium companies that would otherwise have found securing credit difficult. The Fed has also kept interest rates low in hopes to keep the economy flush with inexpensive loaned money. The federal government tried early to ease the pain to the middle class with a stimulus check and actions such federal student loan payment deferment. 

The Fed is trying to instill confidence in this economy and get people and companies to spend money. Keeping rates for low for years to come will benefit the spenders and inspire projects to move forward. 

I do believe that the Fed did accomplish some of its goals for the economy. This is from my experience at work and my own personal experience with refinancing a home loan and cashing out equity to spend on home renovations. Working in residential design, the construction industry in Colorado and Salida is strong. People are using the low rates to secure money and help the economy. 

The federal government was fast to act early getting payments out quickly to help ease the pain from the shutdown to the economy in March and April. However with elections and politics getting in the way, the government has been unable to agree to a path forward. The new year and new administration will bring new challenges to the economy with programs ending and new ones badly needed to keep up with the effects of the pandemic.

It many ways the fed and government are managing the situation well enough for me. But this may not be and probably isn't the case with many people. Without getting to off topic the federal government should have did more to limit the growth of the virus. This may have limited the length of this affair. Now we are stuck waiting for a vaccine to move forward. The low rates help, payment deferments help, and stimulus money helps but confidence and clear messaging, in my opinion, could do more to move us forward.