Ben Bernanke's Power Over Your Money

                                                                                                                                                   M. Porter

Sunday June 23, 2013

Macro Economics

Professor Kassens

Ben Bernanke’s Power Over Your Money Response

            After reading CNN Money’s article Ben Bernanke’s Power Over Your Money, I truly developed an understand for just how much power the Federal Reserve system, and, more importantly, chairman Ben Bernanke has over our economy. However, it is comforting to know that although they may control out economic system all together, they only have the best intentions in whatever decision they make.

            This particular article focused on the impact of the economy lowering the stimulus plans that are currently put in place in our nation. Consumer’s, however, are fearful that with decreasing the amount of stimulus our nation’s borrowing rates (which have been historically low the past years) will unavoidably raise back to what they once were. As a matter of fact, 30-year mortgage rates have actually already risen from 3.35% to 3.98%.  However, while this is occurring other rates such as auto and student loans have decreased over the past years, they show no signs of increasing. What’s also very concerning about this decrease in stimulus is how it’s affecting those who are retired in the United States. Retirees save their money, and really depend on CD’s, bonds, etc. What is concerning about this is now retiree’s are now receiving less returns on these CD’s because of this, which is just less money for them to live off.

            I truly think this is a big deal for our economy and our nation as a whole. By decreasing the amount of money the Federal Reserve puts into the economy, it will only cause savers, and consumers alike, confidence to consumer or spend money to decrease, which is something you never want to occur in a nation. If people become hesitant to spend their money, it means less profits exist for others. This may not seem like a big deal but when people are consistently loosing profits, the economy essentially contracts. What’s interesting about this fact also is according to Keynes; the best way to pull the economy out of a slump is to increase government intervention and government spending (stimulus). There’s no doubt that different rates in our nation will also rise and fall, I just find it interesting why Bernanke would want this to happen if our economy has been doing so well as of late.

            Overall, this is a very interesting and important matter. By decreasing the stimulus in our nation today, we will only increase rates that have been historically low over the past few years. I understand that not everyone agrees with how much or little the government spends, but I would think that almost everyone does not want the economy to contract, potentially falling into another recession all together. I just hope that consumers still have the confidence to spend the money they earn to generate profits for those around them.

Work Cited:

            Hicken, Melanie. "Ben Bernanke's Power over Your Money." CNN Money. CNN Money, 20 June 2013. Web.