Monetary Policy in 2001

The report also identified a continued slump in demand for capital goods as a significant cause of the continued slowing of the national economy. The report cited concurrent slowing of foreign economies as another factor contributing to the decline in manufacturing in the United States in the first-half of 2001 (Board of Governors, Federal Reserve System, 2001b).

The Federal Reserve, through the Monetary Policy Report, contended, however, that a number of factors are in place that should set the stage for stronger growth, both in the last-half of 2001 and in 2002. The interest rate cuts implemented by the Federal Reserve itself rate special emphasis as a factor that would lead to renewed economic growth in the United States (Board of Governors, Federal Reserve System, 2001b).

Other factors mentioned in the Monetary Policy Report as causes for optimism for economic growth in the last-half of 2001 and in 2002 were the federal tax cuts and wha

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simultaneously increase federal government spending, and reduce federal taxation levels. This combination of factors, however, was characteristic of the Kennedy and Johnson Administrations that also created substantial budget deficitsùbut nothing of the magnitude of the Reagan/Bush deficits. In 1980, the conventional wisdom of the economists advising candidate Reagan held that high federal budget deficits would lead to higher interest rates, double-digit inflation, and increased unemployment. Not all economists, however, agreed with this contention; some said that deficits were the result of inflation, and not the other way around. The economic record of the 1981-1988 period knocked the props from under each of those arguments ù at least in the short-run. The Reagan deficits appear to have had Keynesian effects on the economy, to the chagrin of the Administration's economic advisers. The problem with what occurred is that the Keynesian effects of the Reagan deficits were, indeed, short-run, as the economic recession experienced during the Bush Administration demonstrated. Business Cycle Experience in the United States Until the economic downturn began in 2001, the United States had been free of the effects of the busine
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Some common words found in the essay are:
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