How Monetary Policy Affects Us Every Day
The government & it’s hands on the economy.
Good morning everyone,
Monetary policy can be a very confusing topic for people of all ages across the US. The government uses its control over these policies to support the long-term economic growth and maximum employment in America.
Monetary policy can affect our lives in a number of ways, both on a societal level and on an individual basis. In this article, we will explore the most important effects of monetary policy and discuss how it can impact us every day.
How It Affects Us
Monetary policy can have a large impact on society as a whole. For example, inflation is one of the main goals of monetary policy. Inflation can have a number of effects on society, such as reducing the purchasing power of money and causing economic hardship for certain groups of people.
However, inflation is just as necessary to keep the economy from stagnating for too long. The current long-term goal of the Federal Reserve is to lower inflation and keep it at around 2%.
Additionally, monetary policy can also affect interest rates. Interest rates play a large role in our economy, and changes in interest rates can have an impact on everything from housing prices to the stock market, which in turn influences everything else.
How it Affects You
On an individual level, monetary policy can also have several effects on everyday life. For example, if you have a loan, changes in interest rates can impact your monthly payments.
Monetary policy can also affect the prices of goods and services, impacting your living standard. Additionally, if you are saving for retirement or other long-term goals, changes in interest rates can influence how much money you will ultimately have saved.
The monetary policy during the pandemic was very accommodating to the economy by printing large sums of money; this, in turn, led to extremely high inflation and very expensive everyday goods and services.
Varying interest rates can also cause businesses to expand or contract their operations, which can lead to more job opportunities or fewer job opportunities.
Currently, the federal reserve is raising interests at a very rapid pace. This is causing many businesses to freeze hiring altogether or lay off their employees to reduce expenses.
It’s important to note that there are many other effects of monetary policy, both on a societal and individual level. But, the topics I chose to include were ones that affect everyone no matter their social or economic class.
If you enjoyed today’s article, consider sharing it with a friend : )
Have a great day, and remember to live in the moment.
