Three of the Most Powerful Men
Ben Bernanke of the United States Federal reserve, Jean-Claude Trichet of European Central Bank and Masaaki Shirakawa from the Bank of Japan , were listed by Newsweek in 2008 as the fourth, fifth and sixth most powerful men in the world respectively. Their positions as main bankers of the world biggest economies make them even more powerful than most leaders of the world. Their major task was to pull the world from the recession, which had made the world slump into an economic mess.
During the recession of 2008-2009, global economic growth was slowing to a standstill with economists projecting that the world economy will expand at 0.2 percent in 2009, being the worst economic slump since 1950. Prior to the recession, 2007, the world economic growth was at 5 percent. The role of Ben Bernanke, his counterpart from Europe Trichet and Shirakawa of the bank of Japan, was crucial in avoiding weaker growth that might have fuelled economic nationalism.
During this period of the recession, the major banks of the world, united to reduce the interest or lending rates worldwide. This was to spur revival of the economies by increasing growth and propping up financial systems. The European central bank reduced its key rate to 2.5 percent, the Bank of England dropped to 2 percent and the federal reserve dropped its short term lending rate from 5.25 percent to as low as zero. Consumer consumption was increased due to the lowering of the interest rates. People could afford to spend more and central banks were lending more money to local banks to spur growth. In addition, more money was supplied to rescue companies that were crumbling.
The United States is the largest economy in the world and its monetary policy affects significantly the economic and financial positions of other counties. There is need to improve the monetary policy and my suggestions to the Federal Reserve, is to make it curb inflation, improve economic output and increase employment. The Federal Reserve should avoid inflationary effect of pumping too much into the economy and supplying very little money to the country, which may lead to recessionary effect
Furthermore, there is need to introduce tax cuts and interest rate cuts that will help put the economy back on truck. Strong growth in the US economy will depend on a surge in consumer spending and this I believe will be due to enactment of Tax Cuts. To stimulate consumer spending, the Fed will need to reduce short-term interest rates to support the expansive effect of Tax cuts.
In conclusion, to beat the recession, Bernanke, Trichet and Shirakawa united the major central banks of the world to avoid the 1930’s recession that led to the great depression. They run the economies of the world’s greatest powers and so their role control nearly all the worlds economies depend on them. They are more powerful than most leaders of the worlds
References
Robert J Samuelsson. (December, 2008). “The Global Elite: Economic Triumvirate”. Retrieved from http://www.newsweek.com/id/176288 (12th December 2010)
Bernanke. (January, 2010), “Monetary Policy and the Housing Bubble”. Retrieved from http://www.federalreserve.gov/newsevents/speech/bernanke20100103a.htm (12th December 2010)
Olivier Blanchard. (September, 2009). “Sustaining a Global Recovery”. Retrieved from
http://imf.org/external/pubs/ft/fandd/2009/09/blanchardindex.htm (12th December 2010)
Meigs A. James. (November 1976). “Campaigning for Monetary Reform: The Federal Reserve Bank of St Louis in 1959 and 1960”. Journal of Monetary Economics.
