How Can We Fix Current Inflation Levels?

-----------------------------------------------------------------------------------

Monetary Policy Visual:

Monetary Policy:

Monetary Policy is a go- to strategy that reduces the effects of inflation. Over the century, inflation has dramatically evolved in respect to the evolution of Monetary Policies. In essence, the U.S. uses their "central banks" to "control the overall money supply" of the nation, and this is usually brought about through rises in "interest rates" that the government enforces (Investopedia Team). Due to the Ukraine issue recently, Federal Reserve Jay Powell has been compensating whether or not to raise interest rates, this way people are less likely to take out loans and borrow money that the government simply does not have. This is efficient for today's inflation problems, because the average interest rates lie between 1.5%-1.75%, which is pretty high considering the fact that these are the highest rates the US have seen since 2019. Monetary Policy is very beneficial because it allows the government to hold on to their borrowed cash and scale it to the point where the accumulated cash could be set in circulation between banks (People-Banks-Government-People). Acknowledging the circulation of money will accommodate for some of the inflation rates being oppressed upon the economy. The serge of low high interest rates makes it more difficult to purchase down payments on vehicles and housing options, therefore preserving the circulation of money and reestablishing balance in the value of U.S. currency.

Fiscal Policy Visual:

Fiscal Policy:

The use of Fiscal Policy is generally a more serious strategy that's used to resolve high inflation rates, especially if Monetary Policy programs don't uphold their efficiency in reducing them. Basically, Fiscal Policy is a method that the government uses, where citizens' taxes are raised to reduce the circulation of money through decreased spending rates. Many people believe that raising taxes would be beneficial for the nation in a war crisis because of militia fees and societal preservation programs. This alternative has since been brought up more recently because of the tension going on between Ukraine, and the unusual initiation of missile tests between Russia and North Korea. Using Fiscal Policies can also bring more value to the community, because the extra cashflow from taxes would be used to improve the quality of the economy. A run-down economy will generally have more inflation because all goods available would be more valuable to them. By using Fiscal Policy, more businesses will be able to recover from the turmoil of quarantine during the serge of Covid 19. This will help increase employment across the nation and further balance out the distribution of money. After many businesses were shut down, inflation had risen because of the sudden change in money circulation and the rate of the unemployed was increasing day by day. In the end, Fiscal Policy is a win- win situation because it reestablishes the rate of employment and opening businesses while also improving the quality of life in the economy.

Explanation as to What and How Policies can be used to Reduce Inflation

This video goes over different policies that are used to tackle inflation, and how each one is unique and beneficial in their own way.