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National Debt And Debt Of The Federal Government - 1835 Words

National debt, the accumulated debt of the federal government, has always been a major political issue for the government. The United States has always been in debt, in fact, we started out in debt. In 1977, The Continental Congress needed to borrow money to continue the Revolutionary War. As the years went by, and more presidents took office, the national debt increased. As of September 1, 2016, the United States national debt was listed to be $19.5 trillion. With all the national debt, the government must find a way to use it. This is where deficit spending, the use of borrowed funds to finance government expenditures that exceed tax revenues, comes in. Although national debt has a lot of disadvantages, there are also many advantages. National debt gives countries the opportunity to receive extra funds to invest in economic growth, and it’s a safe way for foreigners to invest in a countries growth by buying government bonds. National debt allows the government to fight against contingencies, and also allows the government to build new roads and bridges, improve education, job training, and provide pensions. This spurs citizens to spend more instead of saving for retirement, further boosting economic growth. National debt can also help cope with depression. Disadvantages of national debt include the fact that governments tend to take on too much debt, and it will interfere with economic conditions. Fighting against contingencies, such as tornadoes, hurricanes, earthquakesShow MoreRelatedU.s National Debt And History1304 Words   |  6 PagesUS national debt and history The national debt of US is the amount owed by the federal government. In the past decade, $12.7 trillion have been added to the US national debt and at the end of fiscal year of 2016, the amount is expected to be approximately $22.4 trillion including federal, state and local. Debt per citizen will be over $63.000 and debt per taxpayer is about $163.000. The largest budget is medical care which is about $1.5 trillion and mostly introduced by Obama’s administration andRead MoreHow Big Is The National Debt And Describe Its History?905 Words   |  4 PagesUS national debt and describe its history? There seems to be a surge in national debt during the GW Bush and Obama administrations. Why is that? What are the consequences of a large national debt? Is it going to hamper the economic growth as some have claimed? Is it possible for US to default on its debt in future? Explain. Why the Nobel winning economist Paul Krugman is not as alarmed as many others are with respect to the high level of US national debt? Describe how big US national debt is andRead MoreThe Federal Budget Deficit And National Debt870 Words   |  4 Pages The Federal Budget Deficit and National Debt Basically, what the federal budget deficit is a shortage of funds that are available for the government, where more money is being spent than what the government receives. But, national is where the government borrows money through various ways. The data for national debt and federal budget deficit from the year 2001-2013 is given in the chart above. As we can see in the graph, the deficit is still remains in our economy even though there hadRead MoreThe National Government Of A Country Essay1622 Words   |  7 PagesThe National Government of a country consists of various characteristics, procedures, positions, and beliefs, that create a great comparison to such traits of a complex business. Whether it s developing a nation s annual budget, analyzing deficits or surpluses, accumulating government liabilities, or outsourcing to investors, the governments of all dominate nations have and will continue to run like any other successful business. In the case of a country, the economic, societal, foreign, militaryRead MoreThe Federal Debt Of The United States Of America1543 Words   |  7 PagesThe Notorious Federal Debt of The United States of America Alexander Hamilton was the first individual who introduced the national debt to the U.S. believing that having a debt would be a national blessing. As decades and centuries past by the federal debt continued to grow which led economist’s believing that deficit spending is an important factor. Another contributor to this national debit is also the federal budget the President and congress go over every year, which includes an acceleratedRead MoreThe United States National Debt Essay823 Words   |  4 PagesOn the Sixth Avenue in Manhattan, there is a national debt clock that shows the amount of United States national debt. The clock was first installed in 1989, and can show up to ten trillion dollars. It ran out of digits in October 2008 when the sum of debt exceeded the amount. A new clock with two extra digits is going to be installed (Izzo 2 ). We hear about the debt almost every day: news talks about it, politicians argue about it, even President Obama gives speeches on it. So what is the significanceRead MoreThe National Government Of A Country Essay1302 Words   |  6 PagesThe National Government of a country can be immensely compared to a complex business. Whether it s developing a nation s annual budget, analyzing deficits or surpluses, accumulating government liabilities, or outsourcing to investors, the governments of all nations have and will continue to run like any other successful business. In the case of a country, the economic, societal, foreign, military, and national strengths, are relying on the influence of a business mentality throughout the nations’Read MoreThe U.s. National Debt1650 Words   |  7 PagesU.S. national debt is very large at more than three-quarters the size of the economy—and growing federal spending, especially on entitlements, is quickly driving the debt to damaging lev els. Federal spending was about 23 percent of the GDP in 2012—far above the historical average of 20.2 percent. It is projected to surge to nearly 36 percent in less than one generation. The government debt must be limited in some way or else our economy will face devastating consequences. The government debt has hadRead MoreAnalysis Of The Federal Budget Deficit And The National Debt1642 Words   |  7 PagesANALYSIS OF THE FEDERAL BUDGET DEFICIT AND THE NATIONAL DEBT Morgan Sibley The Federal budget deficit is the amount of spending by the Federal government that is in excess of how much money the government brings in annually. While the Federal budget deficit has steadily decreased overall during the past fifteen years, our Federal debt continues to grow at a drastic rate. A review of how the Federal deficit has evolved over the past fifteen years, the rate of growth of the Federal debt during thatRead MoreFederal Deficit And The National Debt1661 Words   |  7 Pagesyears of the federal deficit and the national debt, as well as examination their relationship. This paper also looks at how the deficit is created and dealt with, along with what happens to different areas of the economy when the deficit’s size changes. Lastly this paper covers who owns the national debt, how these people are paid off, and the interest rate of the debt. Federal Budget Deficit with a sprinkle if National Debt (1, 2, 3) The federal budget deficit and the national debt are two different

A Day Without Latinos Free Essays

Nine percent of Utah’s population is Latino or Hispanic.   And, at least thirty percent of the households of Utah have a Latino or Hispanic individual present, regardless of whether the immigrant is living as a relative or working as a maid in the household (Overview, 2004).   Indeed, the Latinos are very hard working people. We will write a custom essay sample on A Day Without Latinos or any similar topic only for you Order Now They are studying with other racial groups in schools and colleges, and although many of them feel that they are discriminated against, they have already proved themselves to be â€Å"a growing and developing economic power base† (Warner, 2004).   This means that the Latinos are rather important to the economy of Utah today. They are especially represented in the service industry.   Hotels, restaurants, the agricultural industry, construction and reconstruction – a variety of businesses are using the help of Latinos.   What is more, Latinos are paid less than the other workers are on average.   For every 72 cents given to a Latino for his or her work, a person from another racial group gets a dollar (Media). Now if all Latinos were to leave Utah for a day, the economy would most definitely slow down and experience loss.   There would be countless absentees in the workplace, school attendance would fall, and those that discriminate against the Latinos would breathe a sigh of relief.   Still, the economy would bear the brunt of the departure of the Latinos. In order to produce the goods and provide the services that the Latinos were previously helping businesses to produce and to provide, businesses would have to hire for a day workers that would charge more than the Latinos do.   Budgets would have to be changed, as businesses face a rise in their expenditures. Moreover, businesses might decide to cut the supply of their products because of the increase in expenditures.   It may also be that businesses would not find replacements for the Latinos through the day.   Hence, businesses would have to slow down if not close down for the day.   In the long run, the economy of Utah would be seen to have been affected by the departure of the Latinos for a day.   Ã‚  Ã‚  Ã‚   Utah, like all other states of America, thrives on diversity.   As a matter of fact, there is no state in America where diversity does not hold a very special place in the societal structure. People who are living with the Latinos, and those that study with young Latinos in schools and colleges would testify that Latinos do add value to their particular groups. When Latino maids in the home have to leave for a day, the mothers of the children for whom they had hired Latino maids, would also have to leave their workplaces in order to care for their children without maids.   This, too, would have an affect on the economy.   What is more, the value that Latinos add as family members is known only to the members of the households that Latinos occupy. A Latino wife or husband leaving home for a day might turn out to be a problem for the spouse.   And, when the effects of the losses are accumulated taking into consideration the entire society, it may become obvious that Latinos are indeed an interwoven part of the societal fabric that cannot be torn apart without negative consequences. Those that discriminate against the Latinos of Utah might breathe a sigh of relief in the absence of the Latinos.   Still, when the effects on the economy are brought into full view, the people that discriminated against the Latinos would also be seen to have been affected by the loss. Latinos are today akin to an engine in a factory that cannot be done away with although there are many other engines in the same factory performing the same kinds of tasks in a different way.   Seeing that the first engine is present is evidence enough that the engine is important to the factory.   Similarly, Utah cannot imagine itself without Latinos at present. This racial group has become an indispensable part of the lives of people who occupy Utah, in addition to their livelihood.   Gladys Gonzales, the editor and publisher of Mundo Hispano, explains this indispensability thus: â€Å"We are bringing synergy to this state†¦ We are hard workers with an entrepreneurial spirit.   We want to contribute positively to this state and this country† (Warner). It is this positive attitude that has allowed the Latinos to be fairly successful in Utah, despite the problems that they might face in their personal or public lives.   Furthermore, the Latinos are expected to continue adding value to the society and the economy of the state.   Indeed, if the Latinos were to leave Utah for a day, they will be missed by their friends, employers, and customers in Utah. Even those that were displeased with the presence of the Latinos in Utah would face a loss as their favorite restaurants are closed down, and their businesses face an increase in expenditures.   Perhaps for such people, a day without Latinos would serve as a wake up call.   The Latinos would be anxiously awaited back in Utah. References Media Contacts. â€Å"U of U Researcher Reports Latino Immigrants’ Experience in Utah to be Mixed.† University of Utah. Retrieved from http://www.utah.edu/unews/releases/05/jun/immigrants.html. (4 April 2007). Overview of Utah’s Hispanic/Latino Demographics. (2004). State Office of Ethnic Affairs. Retrieved from http://ethnicoffice.utah.gov/public_policy_and_research/documents/oea.his.lat.0505.pdf. (4 April 2007). Warner, Laura. (2004, March 27). â€Å"Bias exists, but Utah Latinos optimistic.† Deseret Morning News. Retrieved from http://deseretnews.com/dn/view/0,1249,595052024,00.html. (4 April 2007). How to cite A Day Without Latinos, Papers

Central Bank Independence and Implementation of Monetary Policy free essay sample

Central Bank’s Independence and Implementation of Monetary Policy Page 5 Internship Report 1. Introduction The Central bank of any country plays a vital role in the economy of that country. It plays a major role by being Government’s bank and helps Government in smooth running of economic affairs by maintaining the price stability in the system. Historically, the role of the Central bank was to print money, hold foreign reserves, formulate monetary policy and act as Lender of Last Resort (LOLR). The beginning of the 1990’s marked the new era in the history of central banks’ roles, when Reserve Bank of New Zealand was granted the clear objective of maintaining the price level stability in the economy with operational independence to achieve this objective. Soon Bank of Australia, England and Canada were granted the same autonomy. But this only objective was confined with central banks of developed countries, whereas central banks in developing countries are performing another role and that is to support growth in the economy. Developing nations’ central banks have since then have shifted their focus in order to achieve these goals. Historical data of Inflation and GDP growth of developing nations suggest that these both goals have not been achieved, if achieved then their sustainability remains short. This may be due to some missing factors like Central Bank’ Independence and autonomy whether in goal setting or in ways through which it achieves its goals. Thus the objective of the study is to find out whether SBP, in its completion of goals is independent or not? And is there any relationship between CBI, macroeconomic variables and effective implementation of monetary policy. Section 1 covers literature review, section 2 of this paper covers definition of CBI, section 3 of the paper explains how CBI is measured; section 4 shows relationship between CBI and economic performance and section 5 concludes the report’s main points. Central Bank’s Independence and Implementation of Monetary Policy Page 6 Internship Report 2. Literature review Cukierman, Alex, (2005) in his paper Central Bank Independence and Policy Results: Theory and Evidence has put great emphasis on the high level of Central Bank Independence (CBI) and argues that it is the desirable feature of any monetary policy making institute. He states that the most important responsibility of the Central Bank (CB) is to assure price and financial stability and to achieve its main objective the bank should have (a) Instrument independence, (b) bank should not lend to government, (c) bank should have sufficient financial independence and (d) bank’s high officials shall hold posts for longer tenures and they should not work anywhere else in order to avoid conflict of interest. Author further goes on to explain existing relationship between CBI and economic performance in the areas of Inflation, growth, investment and real rates in his paper. Walsh E. Carl, (2005) in Central bank independence prepared for the New Palgrave Dictionary defines CBI as â€Å"the freedom of monetary policymakers from direct political or governmental influence in the conduct of policy†. Carl in the later part of the paper states that many developed countries after 1980’s have granted greater independence to their monetary authorities and these reforms have shown negative correlation between CBI and stable and low inflation rate. In the case of developing countries, he says that there exist positive relationship between CB Governors’ turnover rate and inflation. Paper highlights that critics of the reform movements towards central bank independence have expressed concerns that independence can weaken the accountability of central banks and they should be supervised in their goal setting and implementation process. Alpanda et al. , (2009) in Political monetary cycles and a de facto ranking of central bank independence state that political monetary cycles are less likely to occur, in countries with independent central banks. CB, if independent can resist political pressure exerted to stimulate the economy before elections in the form of increased government spending or tax cuts. Writers further argue that money growth is larger among countries having low CBI in election periods vs. non election periods. Two variables were used to identify occurrence of political monetary cycles i-e M1 and election dates of the national leaders. Alpanda et al. , have ignored the borrowing capacity of government as high capacity of borrowing would Central Bank’s Independence and Implementation of Monetary Policy Page 7 Internship Report lead to lesser need for distortion in monetary policy. Rankings are therefore derived from the behavior of central banks during election cycles when their independence is likely to be challenged or their lack of independence is likely to be revealed. Siklos L. Pierre, (2008) in â€Å"Does central bank’s independence still matters? † says that the term â€Å"independence† defines the position a monetary authority has in the state of affairs. Author states that CBI has been loosely defined to meet the needs of countries such as turnover rate (TOR) and on other side it has been defined as set of characteristics that are legally defined and show relationship between government and CB. Author argues that CBI is not measured as a single index but is set of dejure and defacto characteristics and of those the optimal level cannot be found. Four elements of each characteristic are selected to convey negative relationship between CBI and inflation. Jeroen et al. , (2009) in their paper â€Å"Inflation and central bank independence: A metaregression analysis† elaborate that many countries granted their monetary authorities greater independence. According to authors, to identify whether there is any relationship between CBI and inflation, one needs an indicator of the extent to which the monetary authorities are independent from politicians. Most empirical studies use either an indicator based on central banks’ laws in place or TOR. Authors suggest that countries with a more independent central bank will, on average, have lower levels of inflation. Billin, (2001) in â€Å"Central bank independence and economic performance in Eastern Europe† writes that both the measures of CBI and of financial market development (FMD) show significant association with macroeconomic variables. Next section of his paper examines both the trends and the economic performance in eight Eastern European countries and the degree of CBI granted after reforms. The author argues that both CBI and FMD may facilitate market reforms by helping to enforce fiscal and financial discipline. Author’s empirical inquiry via correlation analysis suggests positive association of both CBI and FMD with price stability. Jose De Gregorio in his presentation on Central Bank Independence and the Effects of Monetary Policy (2005) says that legal CBI is negatively correlated with inflation in Eastern European and Latin American countries. Furthermore, he goes on to say that legal Central Bank’s Independence and Implementation of Monetary Policy Page 8 Internship Report independence is precondition to gain credibility in countries where inflation records are poor for independent functioning of the CB. He concludes on the point that narrow pass through of exchange rate to import prices and macro economic performance is positively linked to CBI. Jacome et al. , in their paper â€Å"Any Link Between Legal Central Bank Independence and Inflation† Evidence from Latin America and the Caribbean† (2005) have tried to find out negative relationship between legal CBI and inflation. They have used different measures of legal CBI like the rules for the appointment of central banks’ board of directors, the degree of CBI in the conduct of exchange rate policy, rules governing Lender-of-Last-Resort (LOLR) facilities and legal requirements on accountability and transparency and the results show negative relationship between legal CBI and inflation after controlling for international inflation, banking crises, and exchange regimes in the sampled countries. Central Bank’s Independence and Implementation of Monetary Policy Page 9 Internship Report 3. Defining Central Bank Independence Defining the concept of Central Bank’s Independence (CBI) is a tricky job. It seems to be an unambiguously defined concept now, because we as authors end up defining our own understanding of it. Large amount of work has been done to argue that high CBI is directly related to the long term economic performance. The primitive work on the definition of CBI was done in 1824 by David Ricardo who emphasized on issuance of the currency by Commission elected by government and communication hindrances between them on the issue of lending currency to the state. The advocates of the high CBI throughout the world are found to be on the common grounds i-e they all agree to it that if central bank is not independent politicians can abuse the power of printing money and this is how they can distort the inflation and output level in the economy in order to earn political gains, whereas central bank is seen as playing role in the best interest of the society. It is also considered that there may be no single and right definition of CBI, but in general it is defined within two factors/aspects of the independence; Independence of objectives and Independence of instruments. Independence of objectives refers to the autonomy central bank has in setting its own goals whether that can be of inflation targets, money supply, exchange rate management or others. Independence of instruments refers to how much central bank has independence in determining the best possible ways to achieve its policy goals. This bifurcation is widely accepted by Fraser (1994), Briault et al. , (1996), Amtenbrink et al. , (1998) and Debelle (1995). Siklos, (2008) argues that the definition of CBI has not been defined narrowly. Some measure it in the turnover rate of governors (see Dreher et al. 2007)) while others state that it the existing set of characteristics that defines relationship between the government and the central bank. The bottom line is that economists are still trying to precisely define CBI and its significance for achievement of the required targets set by government or central bank. Central Bank’s Independence and Implementation of Monetary Policy Page 10 I nternship Report 3. 1 Measuring CBI In order to gauge the independence of CB, following criteria have been selected: ? Appointment of the CB Governor: As per literature review, appointment of the governor comes under legal independence of CB.