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To: Dont_Tread_On_Me_888
We're going in circles here. Of course you're right that the state of the economy has everything to do with the business cycle, just as the business cycle has everything to do with the state of the economy. Government can have a significant effect on the state of the economy with tax policy.

The Federal Reserve can (and usually does) have everything to do with the state of the economy because it affects business cycles by mananging short term rates and bank reserves but it is still the president who appoints Fed governers and the chairman.

72 posted on 11/17/2005 10:48:16 AM PST by groanup (shred for Ian)
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To: groanup
We're going in circles here.

No, you are going in circles. I am telling you the straight economic facts of life.

Of course you're right that the state of the economy has everything to do with the business cycle, just as the business cycle has everything to do with the state of the economy.

No, you are incorrect. Each is not the cause of the other. The business cycle iteself carries the greatest weight of all reasons for the current state of the economy. The USA's economy playes second fiddle to other factors that dictate the current state of the economy, since our economy is part of the world economy and the business cycle is global in nature.

The Federal Reserve can (and usually does) have everything to do with the state of the economy . . .

Simply not true.

because it affects business cycles by mananging short term rates

No, the Fed does not manage short term interst rates. Those who say that imply that the Fed makes short term rates go up and down. The Fed is REACTIONARY. The Fed REACTS to market rates and then adjusts rates to reflect what is already happening in the market. The reason why rates go up and down is due to market forces, then the Fed reacts to market forces by adjusting the Fed Funds rate or Discount rate based on what they see happening in the market.

80 posted on 11/17/2005 1:25:21 PM PST by Dont_Tread_On_Me_888 (Bush's #1 priority Africa. #2 priority appease Fox and Mexico . . . USA priority #64.)
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