I am hosting the Firedoglake discussion of my colleague Randy Wray’s new “Primer” on macroeconomics. Macroeconomics is the study of the overall economy – economic growth, recessions, depressions, inflation, unemployment, and employment are big issues that macroeconomics studies. The key policies it addresses are usually divided into fiscal (tax and spending) and monetary policies (the growth of the money supply and setting interest rates).
The concept of monetary tools has broadened as we have seen the Federal Reserve change what had been a severely constrained “lender of last resort” function of the central bank into the most massive bailout program in history. Similarly, the central bank’s interest rate setting function that was long focused on short-term rates has expanded into large experiments that attempt to lower long-term interest rates (“quantitative easing”).