US Policies
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Financial policy and foreign trade policy, along with monetary policy are extremely important parts of US economic policies.
The system of developing a financial policy in the United States of America has always been a very lengthy affair and involves a number of procedures. A number of economic policies have been adopted in the US from time to time to make the entire process a streamlined one. One of the most noteworthy examples was withdrawing a certain amount of money from the salaries of employees in order to collect income taxes.
The US federal government formulates financial policies with an aim of encouraging growth process of country’s economy. It also aims to make the US economy more stable and secure. During1930s, policy makers of the United States of America used to follow economic theories of John Maynard Keynes while formulating financial policies. However, by 1960s they had adopted the Keynesian theories to their fullest.
During 1970s, primary aim of the US economic policies was to discover ways in which acute rise in prices of oil and food items could be countered. During the presidency of Jimmy Carter, from 1973 to 1977, economic policies looked to counter unemployment. Economic policies pursued in 1980 tried to focus on loopholes in the United States economy. By 1990 emphasis was on increasing economic strength of the United States of America.
The United States of America has always been an active participant in free trade. There have been certain confusions regarding status of trade policy of the United States of America during 1990s. In the recent times the US has been trying to develop trade relations with a number of countries of Europe, Asia and Latin America. In past, the United States of America had abstained from entering into free trade agreements with other countries. There have been several reasons for that; but those are mostly political situations that have prompted the USA to stop trading with specific countries.
The era of globalization has witnessed some significant changes in the US foreign trade policies. Open trade policies followed by the US federal government has resulted in greater economic integration with other parts of the world. This in turn has brought about positive changes in overall economic performance of the United States.
A major step taken in the context of monetary policy has been the establishment of Federal Reserve by the United States government in 1913. Federal Reserve was allowed to change its reserve requirements in order to suit the prevalent economic conditions after the Great Depression of 1930s.
During 1970s Federal Reserve permitted quick expansion of credit in order to counter unemployment. Monetary policy was tightened in 1979 in the wake of inflation, which had serious impact on the economy. This move was successful in bringing down the rate of inflation. Monetary policies taken by the Federal Reserve in this period also helped in the reduction and disappearance of budget deficit in 1990s.
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