Monday, March 23, 2015

Who in the United States is responsible for maintaining the money's purchasing power?

Really, the whole US government is responsible in some way
for maintaining the purchasing power of the dollar.  Perhaps the most responsible entity
is the Federal Reserve, which is the central bank of the US.  However, Congress and the
President play a role as well.


The Fed plays a large role
because it helps to control the money supply in the US.  When the Fed increases the
money supply, for example, the purchasing power of the dollar can decline.  Congress
also has an impact on the purchasing power of the dollar.  This is because it controls
(along with the president) the nation's fiscal policy.  We can see this happening today
as the elected branches argue over raising the debt ceiling.  If they are unable to come
to agreement, economic chaos may ensue and the purchasing power of the dollar may
collapse.

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