How the government can effect the future of our economy?

Source: quotesgram.com

Have you ever wondered why the people are talking about the bad state of the economy? Or how the government is related to it? Have you ever been told by others to watch your savings account because of inflation? These are all factors controlled by the government. Of all weapons in the government’s arsenal, the strongest is Monetary Policy, according to a recent publication by Investopedia. The government can play with money, which determines the fate of our future economy. Although this seems like a thick claim, Investopedia is a reliable source. They only publish articles that have been reviewed and their videos and articles are always truthful, according to users, on economy and business.

The government wants to see their economy rise. They do this to benefit the people as a whole. The government attempts to change this by giving small boosts to the economy. According to Investopedia, they inflate their currency to give a small, but effective boost. This can impact people in many ways. It can give a short-term boost to the economy as everything is worth more, meaning more cash flow. However, this can impact the economy in a long-term basis. If the money is inflated, people will slowly move away from higher purchases. This eventually will decrease the value of the dollar causing the economy to have a massive fall. Personally, I think the bad outweighs the good as the benefited economy is for the short term and the unbeneficial economy will be affected in the long term. Overall, it’s not the best method, but it can be used in emergency cases to give the country a push forward.

The government can abuse the monetary policy in many ways. They can kick up their game, not just from inflation, but from bailouts. Bailouts are simple. but they can pull off a massive effect under certain circumstances. Bailouts can completely change the rules as stated by Investopedia. It can make weak companies survive longer and strong companies fall easily. If a bailout is performed, that leaves people to invest into weaker companies as they have a higher chance of survivability. If people invest in weaker companies, those weak companies can’t survive forever, so they eventually die out as they have poor structures. This leads to a giant loss of money which can toss the economy down. Although this may seem like a poor strategy, the government can do this in case of the economy rising too fast. If an economy rises too quickly, it has increased chance of taking major failure. However, the government might pull of this card at a wrong time causing the economy to fall drastically.

Future Question: What is out of the government's hand when it comes to economy?