Part 6 starts our look into stabilizing policy, specifically monetary policy. Here in the United States we have developed the Federal Reserve System to control the money supply. This monetary authority grows the supply of money as needed to try to keep the economy stable and in good health. When given this power by the Federal Reserve Act of 1913 they were charged with the dual mandate to achieve maximum employment and stable prices. That means when there are shocks to the economy, the Fed needs to decide if action is needed on their part to return us back to full employment or stabilize prices.

The actions of the Federal Reserve affect our lives profoundly, even though you may have never even heard of them until now. Their action, or inaction, will influence what inflation we experience. Whether they decide to speed up the economy or slow it down will affect the amount of jobs that are available to us. Their injection of credit into the banking system will affect banks willingness to lend us money and the interest rate we will need to pay on loans. And their buying and selling of bonds, as their means to manage aggregate demand in the economy, will ultimately affect return on other bonds and bond substitutes that we may want to invest in. So, we all should be paying attention to what they are up to. We should all be Fed Watchers.

Aside from emergency meetings, the Fed meets 8 times a year to discuss current economic conditions and what actions, if any, are needed on their part. They had their last meeting in March It's a two-day meeting that went from March 15-16. It has become the practice of the Federal Reserve for the Chairperson to give a press conference after each meeting, to convey to the public what they decided and why. Here is a link to the last conference:

https://www.federalreserve.gov/monetarypolicy/fomcpresconf20220316.htm

Watch at least the first 9 minutes where Chairperson Jerome Powell gives the overview. Then answer the following question.

Question: After watching the video, what do you think? Do you think the Federal Reserve has got the situation under control? Do you think Jerome Powell and the Federal Reserve remain creditable and do you feel confident with their forecast that inflation will return to the 2% target in a couple years? And now that the Federal Reserve is "tightening" and increasing the federal funds rates, what do you expect to happen to interest rate at banks and on your future your future loans /debt? How will these changes affect your life, perhaps as a someone in charge of personal finances, a worker, borrower, entrepreneur, investors, etc...?