E5. Introduction to Monetary Policy

This video provides a brief introduction to monetary policy - one of the main elements of economic policy.

Category:

Education

Tags:

• saving
• investing
• savings
• investment
• money
• economy
• wealth
• stock
• bond
• economic
• policy
• monetary
• fiscal
• business

[ghg6541]

Please can you explain in writting why the FED does not control the level of bank deposits and loans.

[savingandinvesting]

@ghg6541 Fed impacts level of bank deposits/loans via policy tools: 1) reserve requirement: amount that bank is required to hold in reserve as a % of deposits. If reserve req. lower, bank can lend more, increase money supply and money ends up as deposits at other banks. Another Fed tool is discount rate at which banks borrow at - if rate is lower, banks willl borrow more and lend more. Thirdly open market operations - best to look at on Fed site as not enough space here. Hope it helps, Michael

[forexyard]

The Fed keeps increasing the monetary supply. How will this affect the dollar?

[savingandinvesting]

@forexyard In and of itself not well - having said that, whenever there is more risk-aversion (and markets trade lower) investors still flock to the US dollar for safety - long-term it is not supportive I think. Best regards, Michael.

[drchristos]

brilliant work michael. keep up the good work.

[street86]

nice job

[SuperCutt]

You look like a psycho killer

[Chaaarge]

great videos. All of them. I take classes in economy, and you really know what you're talking about

[timelessstudios]

Thanks for your videos and please keep them coming. Can you do a series on the prospect of a "currency war". I don't have a full grasp on the macro principles and some of the micro implications. Thanks - JL

[NTSCPALSECAM]

Dear Michael: I would like to offer some suggestions to improve your videos. It's a thumb rule in teaching and particularly in Economics that you substantiate a line of argument or reasoning with examples from the real world. Your video didn't have any! The next point is you should utilize charts or graphs so as to make it easy for others to quickly grasp what you are saying. I hope you will implement these suggestions and notice the difference for yourself. Thank you and Good luck!

[charronfamilyconnect]

What the hell do we have a central bank if we are suppose to have a free market economy? Also why does money only expand through borrowing and how do we pay this all back if interest is not created at the same time loan are extended. Looks like debt has to ballon for us to have more so called money(actually this is credit or debt). What a screwed up system we have?

[kok123]

very nice