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Essay / Research Paper Abstract
This 3 page paper examines a speech made by Alan Greenspan in December of 2002. Economic policy is discussed. No additional sources cited.
Page Count:
3 pages (~225 words per page)
File: RT13_SA540G.rtf
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Unformatted sample text from the term paper:
Board and is almost solely responsible for regulating interest rates. He begins his speech by talking about the gold standard and how it exacerbated inflation. Then, Greenspan (2002) goes
on to say that this was problematic, and by 1979 the government would have to take action. Many remember what were referred to as the Volcker shock policies and double
digit inflation. Interest rates were at an all time high and people were paying about 14% interest rates for their mortgages instead of the 6% loans that is offered at
the present time. It is a time that many who have lived through will always remember. What the government did was to implement policies to slow the growth of money
(Greenspan, 2002). In summary, by ignoring the gold standard, too much money was made and things would get out of control. The answer in part was new monetary policy. Interestingly,
since that time, there have been financial problems in the United States, but it does seem that to an extent, the policies helped. Greenspan (2002) goes on to look at
inflation and deflation as phenomena in their own right. The idea that only inflation is dangerous is refuted by Greenspan (2002). He writes: " The meaning of deflation and the
characteristics that differentiate it from the more usual experience of inflation are subjects being actively studied inside and outside of central banks" (Greenspan, 2002). One of the problems mentioned, that
is related to deflation and inflation is price stability and Greenspan (2002) supports the notion held by central bankers: "price stability is conducive to achieving maximum sustainable growth" (Greenspan, 2002).
He also notes that price deflation is equated with lower wages (Greenspan, 2002). This is obviously problematic. While many people like to pay lower prices on items, it is something
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