Answer
Dear Mr Royalty,

Thank you for your question, allow me to explain. The three tools of monetary policy are minting(via the FOREX market), shrinkage (via the Bond market) and literal expansion (via interest rates). All of these tools have a variety of direct and indirect affects on a nationâs economy. However, due to time and space restraints I will only briefly summarise the central ideas.

Minting, also known as the imperial strategy, is the process of reissuing and refining the broad money flow. Derived from a technique commonly used during the Prussian Empire, of confiscating colonial capital reserves, melting them down and using them create munitions, which had a higher value than the original currency. This was utilised in a particularly aggressive manner in the Kendal region of Europe. The modernised form of method focuses on the manipulation of the foreign exchange reserves in order to expand the extra capital. This acts to lower the wealth of foreign nations, whilst increasing domestic output. The excess capital âtrickles downâ through the corporate and institutional hierarchy and solidifies in the lowest quartile. Some economists have poked holes in this technique due to the detrimental impact on other economies. However many policymakers usually justify their protectionist action under a tic-for-tac guise.

Shrinkage, a tool devised by Austrian economist Wayne Szalinski in 1989, helps to alleviate the problems associated with an overheating economy. The neo-Keynesian concept involves substantial government injections of cash inflows, via the Bond market, it has been employed by the British since 2 007 recession. Prime Minister Silvio Berlusconi also uses this in order to control the Italian job market; however the results have been widely criticised. This overspending acts to âcrowd outâ real consumer spending and decrease aggregate demand. The exact easing of inflationary pressures is usually calculated by what the Wall Street Journal refers to as a âShrinkage Matrixâ.

Finally literal expansion is the process of increasing consumer demand via interest rate manipulations. This tool hinges on popular expectation of interest rates. If, for instance, most people have great expectations of high interest rates and these are not delivered then they will spend more, rather than save. The trial period for this technique was in France between on the 17th of July 1984 and the 29th of July. The outcome was highly positive and the French Chancellor, Alexander Dumas, was highly praised. However on the twelfth night of the monetary experiment concerns were raised about the medium sustainability of this technique without incurring inflation.

I hope this helps with your essay.

Professor E. Concur, New College of Humanities, UK

What would happen to the US Dollar if the US economy is in recession?

I have no idea about economy or this kind of stuff. Cause I plan to travel outside, if the US Dollar is going down I will delay my plan.

Answer
By definition of economics, "a recession is marked by 2 or more consecutive quarters of low GDP (Gross Domestic Products, a nation's spending report)." Each year has 4 quarters, 3 months for each quarter.

By this definition, the recession has already started, because the GDP index has been down for well over 6 months, since last summer's reports. Those well-paid "spokesmen," namely Ben Bernanke, the Fed Reserve, public "economic experts" (the ones that show up on TV), Condoleeza, Pres. Bush, and other heavily-invested financial "experts" (who, of course, would root for their own portfolio investments in order to get more people to buy the same shares) STILL refuse to use the R-word because they don't want the public to know how bad the numbers actually are:

As of this Thursday morning, the unemployment numbers are already in.....407,000 total unemployment claims for the week ended March 29. This number will increase in upcoming months because there are reports of more businesses closing (mostly banks and retail sectors) and laying off even more people as of this week.

The U.S. Dollar has already been declining in value against other nations in the Foreign Exchange (Forex). Ben Bernanke has already slashed interest rates 6 times in the last 6 months. Every time the Fed Reserve cuts rates, it weakens the dollar because the way Forex works is based on a nation's economic conditions. Announcements of rate cuts signals to foreign countries that we are doing so poorly that the government has to take such drastic measures in attempt to get the cash flowing in the economy again. It makes foreigners wonder, "Why don't they have enough money in circulation? Why doesn't the government have enough money to help out? Aren't the citizens employed? Why aren't they employed? Why are there so many layoffs? Hmm....nah, we'd better not invest in the USD, pull our money out and buy Euro or other currencies instead."

Therefore, I would definitely recommend postponing your travel plans, at least until late June or July, when the total bad numbers are expecting to hit rock bottom. Until it bottoms out, they can't even begin to clean up and rebound from this mess.