Fed's Policy on Dollar, Debts & Health Costs

Quantitative easing could refer to the concept of increasing the money supply of various financial institutions through financial floods hence, increasing and promoting their lending and liquidity stability. This concept allows different financial and corporatworldsld to enhance and facilitate the aspect of liquidity across the world thus higher economic growth and development. Equally, this concept expounds on the general economic outlook and the monetary remoneysue….. “Typically, the central banks target the supply of money by buying or selling government bonds. When the bank seeks to promote economic growth, it buys government bonds, which lowers short-term interest rates and increases the money supply.

This strategy loses effectiveness when interest rates approach zero, forcing banks to try other strategies to stimulate the economy… (Martin & Milas, 2013)”

The following are the three economic issues concerning the Federal Reserve’s policy as critically discussed below. A vivid evaluation and analysis have been given to bring out an extensive explanation of the issue.

Dollar valuation

This is one of the economic issues facing the concept of quantitative easing, especially in the world market.

For instance, as the liquid money is flooded in the market then it will translate to…… “Some people want the dollar to decline because they believe it will lower the price of U.S. exports relative to foreign goods and make our products more competitive. But when the economy begins to recover, a  higher money supply will cause inflation, and the Fed will be forced to raise interest rates. This in turn will lower the purchasing power of the American consumer and we all will be poorer…”This could heavily impact the staggering economies, which could be gaining a competitive advantage (Kimura & Small, 2006).

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Financial debts

As a result of the Federal Reserve’s policy, various states are building up their debts hence, making it difficult to c up with the current financial trends, especially in the corporate world and the global market at large. For instance according to the US financial advisor…“.By 2008 we were very upset that the U.S. government had increased the deficit from $6 trillion to $9 trillion over the previous decade. And rightly so: that 50% growth rate was higher than the growth of the GDP. But since 2008 U.S. debt has grown to $15 trillion or 67% in just a few years…”

Health care costs

The issue of healthcare should focus on lowering the health care costs, especially for the low socio-economy class people, and not increasing the bills reflecting on the healthcare spending. This could be evident from the American government, which has facilitated Medicaid spending to the highest levels instead of cutting it downmedical-related to champion the healthcare services to all its citizens. For example… our national goal has been to reduce health care costs, not increase healthcare spending. Unfortunately, we’ve only accomplished the latter, not the former. Medicare now accounts for 15% of the total federal budget and 21% of total national health care spending… (Sinclair & Ellis, 2013).” This kind of an economical imbalance impacts negatively on the majority who are not able to afford the high Medicaid fees and costs hence, the high degree of medical-related problems amongst citizens.

References

1. Kimura, T., & Small, D. (2006). Quantitative Monetary Easing and Risk in Financial Asset Markets. Topics in Macroeconomics.
2. Martin, C., & Milas, C. (2013). Quantitative easing: A skeptical survey. Oxford Review of Economic Policy, 750-764.
3. Sinclair, P., & Ellis, C. (2013). Quantitative easing is not as unconventional as it seems. Oxford Review of Economic Policy, 837-854