Chapter 16

Chapter 16 is titled “the monetary system” and outlines what money is, the different forms and uses of it, and the central center of money in the United States, the General Reserve.

Cash is a medium of exchange and is probably the most important one because it is the most liquid, meaning that it can most easily be converted into the economies medium of exchange. However, cash is not the only aspect of the money supply because it is also made up of demand deposits. The Federal Reserve Board has some control over the money supply and is related to the Federal government because it is made up of governors appointed by the president and is the central bank of the country so it oversees the banking system and regulates the quantity of money for the US economy. They have recently been pushing up interest rates so that it is more expensive to borrow money from a loan, which reduces spending and economic growth. This can also be a result of an increase in inflation.

The Federal Reserve Board may not be directly impacted by every political decision and may seem to have freedom to make their own decisions as long as laws are not being passed that directly affect the Fed or anything concerning the economy. However, they may have to make decisions that parallel their political party, especially if they are still serving for the President who put them in office. I believe that they are as insulated as they can be, however there is not way to completely separate them if they are still elected by the president and have clear political views. President Trump should not have the power to fire Jerome Powell because, although he may not represent Trump’s views or make the same decisions as Trump would, he represents that of another president and other people and unless he makes an actual error beyond just having different beliefs the new president should not have the power to fire the board. I believe that the Board would be better managers of the economy if they had more accountability to Congress because it would allow them to make more decisions for themselves which they believe is better for the country that is removed from political views and the agendas of Congress.