Monetary Policies (demand-side and supply-side)

            Monetary policies and fiscal policies both work hard to reach economic balance.  Monetary policies regulate the amount of money in circulation. The FED play the major role and the chairman nowadays is Ben Bernanke. The FED is in charge of printing money. They also regulate the reserve requirement, securities, and discount rates.

           
            However, fiscal policies have slightly different purposes. In fiscal policies, Congress plays the major role approving budgets and the president writes the budgets. All of the money for budgets is provided by taxes voted on by Congress

             
            To maintain economic balance, Congress has come up with two types of spending, discretionary and nondiscretionary. discretionary spending changes yearly by votes. Nondiscretionary spending is always the same and the laws always state the amounts, it only changes if the laws are new or change too.

Background

            There have been a number of policies in the past in order to maintain fiscal and monetary stability.  During the 1930s and the Great Depression, there was no economic activity and growth. There was too little spending. Demand-side policies consisted in cutting taxes for people for a certain amount of time. Yet, if there are no taxes, the government receives no income and there is maintenance for public services and social projects. This must be a short-term concept or else there is no growth. If it were to be long term, the dollar value would rise and lead to inflation. To fix the GD problem, Keneysian economics state to stimulate demand

            During the 1950s and 1960s, supply side policies for production came up. Supply side policies consist in cutting taxes on big corporations and rich people and allow them more money for spending, thus the economy grows. This is known as the "trickle-down" theory by Ronald Reagan.

            In 2000, the idea came up that fiscal policies are a problem for both sides of supply and demand and they are bipartisan. To work with this, theory states to cut corporate taxes to allow more production and subsidize corporations to create jobs. However, risks do exist with these theories. Some say it only benefits few groups of people mostly big corporations and very wealthy people. Very few corporations act on public interest. If corporations and government become too close, people lose control.