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Word Count: 405
Greenspan and Friends On Tuesday March 20th 2001 The Federal Reserve Committee led by Alan Greenspan decided to lower the federal funds rate from five and half percent to five percent The Federal Funds Rate is the rate at which banks loan each other money over night The Federal Reserve meets eight Tuesdays a year to decide on important economic decisions The Federal Governments overall policy is to interact as little as possible with our open markets The father of modern economics Adam Smith brought over this idea as a souvenir from France The term most commonly used is the laissez-faire System Laissez-faire System is defined as the system at which people exchange goods without governments blocking the way Simply put let the people do as they wish There are many economic problems that result with the Federal Reserve tinkering with the nations economy One reason is the direct signs of inflation Inflation simply put is when prices of goods go up the value of money is worth less There have been cases in other economies in which inflation was so bad that they honestly ran to the bank to cash their check so they could spend it as soon as possible The Fed tries to interact with inflation really sets in In the early 1970s the nations inflation rate rose to double digits As of today thanks in part of Mr Greenspan and friends it is at a mere two percent Another reason for Federal help is when there is a recession taking place A recession is a period of time in which the growth of business activities contract The Federal Government normally steps in when they see this happening because of the fear of it leading to another Great Depression In the recent months this has been a very hot topic Some analyst claim that we are already in a recession I on the other hand think we are
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