how fiscal and monetary ploicy can be used to combat deep recession ?
90610
It's pretty simple. Lowering interest rates encourages spending, which rejuvenates the economy. Alan Greenspan has done a fabulous job here in the USA and I wish he hadn't retired.
269409
Government spending puts more money in the economy . . . but tht doesn't NECESSARILY have an eefect on inflation.  Government BORROWING (i.e. deficit spending) does create inflationary pressures.
117431
If you had a nickel for every time someone suggested that the market was close to collapse, you would have already retired -- there are a number of market pundits that suggest we're close to collapse for a variety of reasons - be it the size of the US deficit, a slowing China, debt to GDP levels - but just like the tech bubble seemed ripe for a fall -- back in 1998! -- it carried on for some time. Simply read as much as you can on the economy, get a feel for the cycle (ie. when things are good versus when things are bad) and get a sense for when it makes sense to take some money out of your investments. I personally suggest watching employment figures. When unemployment ticks up, it's a bad sign. The consumer is a key component to the strength of the economy as a whole. When jobs fail to be created - or worse - when jobs are net-net disappearing, this is a worry. A  very simple tenet, but one to focus on. Good luck.
345037
i assume you mean the U.S. deficit...just keep printing more money and it will be ok.....lol
164735
to reduce payments and interest
727590
I'd suggest that you do both. \n\nA pension fund is insurance, and it will pay off if the economy remains prosperous. Gold is insurance, and it will pay off if the economy goes into the toilet.\n\nThink about it. The Federal Government spent $620 billion more, last year, than it took in. The only way that massive hole in the budget can be plugged is to close down Department after Department, in the Executive Branch, or to raise taxes to the tune of $2,000 or more for every person in the country. If neither option is exercised, the dollar will have to lose value. That's just the way it is. And if the dollar loses value, then whatever you have in savings will also lose value. It's called inflation, and it is a killer of wealth.\n\nGold is a hedge against inflation. If inflation is high, the price of gold goes up, maintaining the security of your savings.\n\nThe price of gold didn't start going down, in the 80s, until the Government proved that it was serious about fighting inflation, and maintaining some sort of stability in the value of the dollar. The price of gold is going up, now, because the Government has proved that it doesn't give a damn about the value of the dollar. Inflation is already raging at a rate higher than it was, when Nixon initiated his failed attempt to control wages and prices, in the 70s.\n\nThe way I look at it, inflation will eat away at the savings you've invested in your pension fund. That's why I'd recommend buying gold bullion. But, on the off chance that we manage to muddle through, somehow, due to some sort of divine intervention, I'd keep contributing to my pension plan, too.\n\nLook at the price that you think gold will achieve, in the next few years. How many ounces of gold will you have to own, at that price, in order to be able to pay off your house? I'd suggest that you find a way to accumulate that many ounces of gold.\n\nOf course, there's always the risk of a second gold confiscation, in the US. They did it before, and they can do it again. Beware.
422551
Buy stocks when the economy is in a recession and has already bottomed out. Advantage: you  will be buying at the low end of a market cycle. Buy low, sell high.  Disadvantage: risk = uncertain about forecast of economic behavior.\nBuy Bonds when interest rates are topping.  Bond prices are at their lows.  ADV: rates drop and you bonds go up in value.\nLeases depend upon each individual property occupancy percentage and the length of the existing lease,  Safest to buy as economy is in an uptrend.  Adv: good cash flow, Disadv: occupancy rate drops and cash flow can turn negative.
915567
Damn good question, you forgot about the best part, weakness of the dollar. Gold is a fools bet at best, you have to be invested ahead of the crisis, and sell out during the crisis to profit, and vintage lever action Winchester rifles have given a better return over the last few decades than gold. Same thing with other collectables (easy to transport and perishable) that people want to replace what they once had or always desired. Bonds, especially municipal bonds tax-free, are another possibility but again low intrest, yet safe, safe as the dollar anyways. In all practicality, I would say invest in something that will allow you to gain wealth like  your education, real estate that will prosper in a niche market like waterfront or near new mass transit routes, or allow you to do a secondary line of work/at home business such as selling discount goods online, or the like. Put it to work generating more wealth for you. Or you can try stock picking and hope for a multi-national exposed stock or fund, but remember democrats like to punish the "rich", that is anyone who invests what they earn, with taxes on your payroll and your stock dividends/stock sales margins from stock you bought with your already taxed income. Remember even the best stock pickers only average success 50% of the time. Or be like millions of other sucker, myself included, and buy a lottery ticket now and then, that's why it exists, to give us "hope".
1145664
market forces do play a part in the rates set by the fed.  the main concern of the fed is to balance inflation and growth of the economy.  If growth is too high and inflation rates spike, then higher rates cool things down.  It's a fine balancing act.
484812
Um...not to state the obvious, but...it's falling.  Markets do that from time to time, and it doesn't necessarily mean that there's anything significant going on.  It's just a sign that people are unhappy/uneasy/worried/ panicking/ taking out money for other things.  \n\nIf a little blip like this has you on Prozac, you'll be comatose before long.  You have to go into investing with an understanding that we'll go through ups and downs.  \n\nHaving said all that, I'm not convinced that this drop is entirely unwarranted.  As one previous answerer said, inflation is now becoming a legitimate worry.  Greenspan, with his magic wand, is gone.  And we're stuck with all this wild spending our government is doing (and not paying for). We're wondering how it could possibly NOT be inflationary.  (Secret hint: it can't.)\n\nSo, armed with that info, what should you do?\n\nPersonally, I've been keen on investing outside the U.S. for some time now.  And today, with overseas markets falling harder than ours, this may be an opportunity to do some switching.  Of course, if the U.S. dollar falls, we'll probably buy less imports from them, but I doubt if that will plunge the world into recession.  We're big, but not that big.\n\nLonger term, I suggest you vote for politicians that understand fiscal responsibility.  (Secret hint: neither of the major candidates in the last election!)\n\nHope you can hold on through this difficult time.
932270
First, spend less than you make.  Then, pay off your debt, highest rates first.  Finally, make investments in different asset classes (stocks, bonds, metals, real estate, etc.) to secure your long-term financial goals.  That's it in a nutshell.
53659
Interest rates are now going to go down.\n\nOn the long term and since 1981 long-term interest rates (the 30 years treasury bond) have steadily gone down from 14.5% to 4.7%.\n\nThis is due to the fact that credit discriminates against the poor. So rich get richer and poor get poorer.\n\nThe marginal use of the money for the rich is savings the marginal use of the money for the poor is consumption.\n\nMore and more money (savings) are chasing investments. The revenues of those investments is the consumption which is going down relative to the mean of revenues.\n\nSo the return of the savings, that is the profit of the investments naturally go down: It is GreenSPan Con-UN-Drum
74344
They are deflationary to combat inflation
766521
It is impossible to disagree with this analysis.  Just look at the economy under Carter in the 1970s.  When the top tax rate was at 70%, we had rampant inflation, high interest rates, and record unemployment.  All of this was a direct result of the out-of-control tax hike.  Businesses, having to pay exhorbitant taxes, passed this expense on to the consumer causing high inflation and thus lowering the value of the dollar.  The fed raised interest rates to slow the inflation, causing home ownership to be out of reach for more Americans.  Businesses could not afford to hire more employees because the money that they would have paid them with was going to the government in taxes.
979655
Fiscal policy is that part of government economic policy that deals with taxation and government expenditure.(Cf monetary policy which has to do with interest rates, credit and the flow of money in the economy)  Government uses fiscal policy to improve the current account by increasing taxation and reducing expenditure if there is a deficit.
482916
well !\nnothing but work hard, know what your goals, save and invest wisely.\ntry different secteur of the economy and take calculated risks.good luck
524201
1/ First of you have to note the diferences. Fiscal policy is changes in tax rates to increase spending by funding govt. activites whereas a monetary policy is about changes in interest rates to improve circulation of money i.e. demand and supply. Both stimulate the economy by increasing/decreasing supply and demand of money through spending whether it is consumer spending or govt. spending.\n\n2/  What are some pros/cons of increasing/reducing taxes to increase spending. When would you use fiscal policy to increase spending and who is affected?...In this case it is the govt.\n\n3/  What are some pros/cons of increasing/reducing interest rates to stimulate spending. When would you use monetary policy to increase spending and who is affected?...In this case it is consumers..\n\nHope that helps with your paper.