Monetary Policy
Compare what is being discussed in the video and what the government has done during the COVID-19 crisis concerning monetary policy. Do you think that the monetary policy applied in the US was better during the COVID-19 crisis compared to the previous crisis? Why or why not?
The united states have taken drastic measures to boost their economy amidst the COVID-19 crisis. These measures are similar to those that were taken during the 2007-2009 economic recession. The actions that the United States have taken when it comes to their monetary policy during the COVID-19 crisis are much better compared to those taken during the great recession.
In both cases, the aim of the United States government was to improve their economic status; however, during the economic recession, the measures were more damaging to the economy. For instance, previously, the FED decreased the money supply to various banks. This led to a lack of money in banks and hence higher interest for borrowing. Currently, the government has increased its money supply. This has led to decreased interest, and so many people are able to access household, mortgage, and other types of loans, hence leading to economic development.
During the COVID-19 crisis, the government has also decreased interest rates. This has enabled banks to borrow more from the government and support others who would wish to borrow from banks. This is contrary to what the government did previously during the economic recession. They increased the discount rates for the banks; hence the banks could not borrow from the government. The government has been very supportive during the COVID-19 pandemic more than ever because they have even come up with ways to support financial marketing functioning by purchasing the massive amount of securities. This has helped boost the economy of the United States.