U.s Monetary Policy In 1995 :: essays research papers

U.S pecuniary Policy in 1995When Alan Greenspan presented the Federal Reserves semi-annual reporton monetary policy to the Subcommittee on Domestic and International MonetaryPolicy, the Committee on Banking and Financial Services, and the U.S. House ofRepresentatives on February, Dr. Greenspan touted a cautionary yet favorableview of the U.S. economy. He states that "With inflationary pressuresapparently receding, the previous detail of restraint in monetary policy was nolonger deemed necessary, and the FOMC consequently implemented a small reductionin reserve market pressures at last July." (Greenspan, 1996, Speech)During the Summer and Fall of 1995, the economy experienced astrengthening of aggregate demand issue. According to Greenspan, this increasein aggregate demand brought finished goods inventories and gross revenue into nearequilibrium. The Feds fine tuning of the economy seemed to be paying off.Greenspan had a positive outlook for the economy for the rest of 199 5. Hestates "the economy, as hoped has moved onto a trajectory that could bemaintained--one less steep than in 1994, when the rate of growth was clearlyunsustainable, but one that nevertheless would imply continued significantgrowth 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 withinflationary expectations waning, Chairman Greenspan and the Federal Reserve press clippingrates again in December. (Greenspan, 1996, Speech)     There are, of course, critics of 1995s monetary policy. Most of thecriticism came in the early part of 1995 when the Fed raised rates again.     In the clause "Are We Losing Altitude Too Fast" from the May 1, 1995issue of Time magazine written by John Greenwald, he explains that the economy great power non be coming in for a "soft landing" like the fed predicts. Trying tosustain 2 to 3 percent growth might lead us into a recession. Mr. Greenwaldexplains how the Feds actions in 1994 and early 1995 has hurt individuals andthe economy as a whole. "Corporate layoffs are far from over," says Greenwald,"they generally accelerate when firms surface themselves in an economy that isweakening." (Greenwald, Time, 5/1/95, p80)     Unemployment and layoffs arent the only thing to worry about accordingto Mr. Greenwald. The automobile industry and the housing markets are both get hit in the pocket books. Paul Speigel, owner of a New York cardealership explains his woes by saying "Were doing our best to keep up the playscript by discounting, working on our customers, but the Feds rate hikes havedampened the ability of many Chevrolet customers to buy that new vehicle."John Tuccillo, chief economist for the National railroad tie of Realtors states