The Laffer Curve

Here is the extremely controversal model designed to lower taxes in an effort to support massive tax cuts while increasing spending brought into popularity by the Regan Administration. It provided the "proof" of the gains of trickle down economics.

Supply Side Economics

Today we will be watching a Frontline video call 10,000,000,000 and counting. This video links with our view point on Supply side economics or neo classical views. The expanding deficits are a result of the massive spending created by both Republicans and Democrats in the Keynesian expansionary movements while encouraging the shrinking the size of government in the US. This video travels through the Bush 41, Clinton, Bush and Obama Administrations and the growing debt.

Ooops, meant to post this about multiple deposit expansion

<{[Deposit - (rr%*Deposit)] * 1/rr%} + $ of OMO>


Any questions?

Please know what part correlates to Max change in money supply, max change in Loans in banking system, initial change in excess reserves and the Reserve Ratio

Test Tomorrow

Any last second questions?

Topics to be included but not limited to:

Monetary Policy
Fiscal Policy
Multiple Deposit Expansion
Bonds
Money Market
OMO
Discount Rate
Fed Funds Rate
RR
The Federal Reserve System
Multipliers
Loanable Funds
Crowding in and out effects
Counter cyclical policies


Did I miss something?

See graph below . . . . .

I don't want to undersell this but I must be the best teacher of all time. Completely generated the graph below, on my own, and found a way to upload it into the blog. I am awesome. True story. One time I tried to not be awesome. It didn't work. I was just as awesome as ever. Another true story.


Sometimes it hurts being this awesome. I had to see the doctor. Diagnosis????? . . . . . . . . bad case of awesome. No cure. Everyday is a struggle trying to be average, so I just end up being more awesome.

You're welcome.

Money Market Graph

Monetary Policy

The number 1 job of the Federal Reserve is to target the growth of the money supply but manipulating interest rates through Open Market Operations. The FED would prefer to stop inflation in contractionary monetary policy (or Tight Money Policy) by raising interest rates through the sale of bonds. Also at the disposal of monetary policy is the ability to buy bonds back from the public thereby creating an increase in the money supply causing inflationary pressure through an expansionary Monetary Policy. The manipulation of the Fed Funds Rate through the FOMC buying and selling bonds is modeled on the Money Market Graph. The FED does not set the rate but influences it by setting targets through OMO.

Other tools of Monetary Policy is the Reserve Ratio and the Discount Rate (referred to in your text as the "Window of Last Resort") but are rarely used. The discount rate is in current practice no longer a "Window of Last Resort" due to the FED attempting to create monetary stability due to the Economic Crisis in Financial Markets in 2008. However, College Board would still prefer that you note that the discount rate and reserve ratio are not significant tools of the FED.

The FED has expanded the tools of Monetary Policy in the last two years but these are not relevant for our coursework as of this moment in time.

Test Day Today

Classical vs. Keynesian
Loanable Funds
Investment Demand Curve
Consumption Function
Savings Function
C-S Link
Philips Curve
Aggregate Model
Determinates of Demand and Supply


These and other topics of interest examined today. See you then

Hedgefund Video

Remember that every media has bias and shown at the end of the video. That is not to say that the facts presented in the video are not true. I have not secured that information provided on the alternative websites mentioned in the video are authentic.

Here is the link for the second video as requested.


http://vimeo.com/3722293

Crisis of Credit Video

Tried to embed the video and it was a big fail. Here is the link. Thanks



www.vimeo.com/3261363