What's Complicating Bernanke's Balancing Act by James Cooper Essay

Whats Complicating Bernankes Balancing Act by James Cooper - Essay ExampleThe Federal take hold was created to guide the tribe towards a stable financial system. Its goal is to maintain stable prices, low inflation, and moderate long term-interest judge. Keeping inflation low though m acetary policies is one of the ways to ensure a stable frugal preformance. The article also talks closely how proposed protectionist policies threaten to increases overall inflation.The author believes that present interest rates are too low, and that globalization makes it harder to determine the right interest rates to promote economic growth. Usually, high demand for goods and services would result in change magnitude interest rates by the Federal Reserve to slow down demand and thus curb inflation. This is appropriate if the demand exceeds economic ability to maturate those goods and services. However, a global market changes the dynamics of traditional economic systems, giving the Federal Re serve less control over the thriftiness. Indeed, prices of goods and services are firm by overseas market factors aside from those in the United States.The issue of globalization, which is the expansion and growth of international economic activity, has always been a fiercely debated issue. It is a complex process operating in various levels which can lead to increased competition, government borrowing, trade, etc. These factors have variable effects depending on the governments policies and management. The authors opine is that globalization resulting into an interdependency among economies will help prevent an economic crisis in the United States from happening (although the dollar could weaken due to the economic success of former(a) foreign currencies). I agree. Nations are turning into one global network where standards of living depend on the value added to that network. It brings about gains thorough consumption and commute surrounded by the nations involved. A significan t amount of economic growth seen in the late 20th century is owed much to globalization and the free trade. One of its drawbacks however, is the dissymmetry in world trade.Article 2 U.S. The Double Whammy That Could Ignite Inflation by James Cooper, March 20, 2006 in BusinessWeek OnlineThe article talks about how the decrease in productiveness together with the rise of labor costs could potentially hike up inflation at economically debilitating levels. sound year, productivity increased-a good performance, considering the economy was weak during the years end. However, the growth rate has progressively declined over the past three years, which is not a good sign. The correlation between labor costs and productivity was also explored in the article the increase in labor compensations has slowed productivity, and the trend is likely to continue.Typically, productivity helps offset labor costs. However, if productivity is low, companies will be forced to raise prices to compensate an d keep profits healthy. As such, this will affect Federal Reserve decisions regarding interest rates. The Federal Reserve can help curb inflation levels by imposing higher interest rates to lessen demand and stabilize economic performance.Economists concur that an economy will be better off if inflation is low, thus economic policies should aspire for stability in prices. A fast growth without inflation could be possible with higher productivity, and the author postulates that this is could be done through companies utilization of technological innovations. For the most part, I agree with this conjecture. The issue about technological and economic changes is not new. Innovations in the Industrial Revolution caused a huge leap