Mr. President, after consulting several experts on this matter, I believe it is necessary to focus our attention on current interest rates and government spending. The first expert, Raymond, states it well when he said we need to concentrate on lowering interest rates in order to get people back on their feet. When interest rates are lower, consumers spend more and therefore stimulate the economy. This in turn can help the unemployment rate, which I do believe is the largest problem in the United States today.
In contrast, Kathy Lee believed raising taxes and reducing government spending would solve our economic issues; however, when you raise taxes consumers are less likely to spend money because they have less money coming into their pockets. Further, when you reduce government spending at the same time, the economy will have a hard time flourishing because there is little to no money generating the economy. Thus, this would not be the answer to our economic situation.Now, I think Patricia has good intent in her suggestion when she recommends selling bonds and raising the bank reserve requirements. Stabilizing our banks is of great concern and I think we have gotten a handle on the situation by making banks more accountable for their policies and procedures.
As we know, they are essentially dotting their I’s and crossing their T’s after the devastating and disastrous banking ordeal. Ultimately, I think Allison may be the most correct when she states we need to increase government spending and lower taxes.This is ideally how monetary policy can help stimulate our economy. By lowering the interest rates, more money will be going into consumers’ pockets and therefore there will be more consumers spending that very money on goods and services. This in itself may not be enough to fully stimulate the economy though and that is why it is important to increase government spending.
I know this is an election year; however, the deficit is not as big of problem as the unemployment rate; thus, you have to increase government spending in order to help the country out of this economic down turn.
