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Is the Monetary Policy Conducted by the American Federal Reserve Really Efficient?

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Is the monetary policy conducted by the American Federal Reserve really efficient?

Does monetary policy conducted by the American Federal Reserve is really efficient?

Introduction

Miller et. Al.2013: Ch. 6: the chapter of this book is a set of articles that all point fingers at monetary policy’s weaknesses and interrogate Fed’s actions’ efficiency. All of them have pretty much a Keynesian point of view about the Fed’s policies failure, so they do not call into questions the existence of the Fed itself and its monetary policy but they rather globally accuse a lack of regulation and claim for an even more important intervention from the government. But over the last decades, we have experienced several Fed’s interventions and many expansionary monetary policies in order to try to counter the negative effects of the crises and then, to get the Economy back on track. However, the recovery is quite slow, the unemployment rate still quite high and a new crisis regularly burst. Thus, it seems legitimate to wonder about the effectiveness of the Fed policy. Does it have a real impact? And more important, does it have a real positive impact?

First, we’ll define the monetary policy, its tools and its goals. Then, we’ll study the Keynesian theory of money and the important role it can play in the Economy and in its recovery - or could, without “interferences” strong Liberal thoughts might cause. Finally, we’ll consider arguments that claim monetary policy has become inefficient by studying failures Fed experienced and Liberal and Monetarist theories that both claim for a non-intervention from the government.
I/ What is monetary policy?

In the US, the Federal Reserve has a well-defined role: controlling inflation and provide liquidity enough to preserve wealth in the economy. Fed is supposed to be able to do that thanks to, among other things, monetary policy

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