Money, Credit and Federal Reserve Policy Changes

The paper is addressed to an intelligent layman in the insurance industry who may not be familiar with operations of the American banking system. As a result, the operation of the central bank, the definitions of money, the author's definitions of price and monetary inflation, the relationships between measures of money and Gross National Product are all discussed before prospects of the new policy's success is discussed. If the paper appears to be too pedagogical in nature, the author does apologize to the reader. However, the author cannot over emphasize how grave a matter price inflation can be for the insurance industry. An understanding of how the central bank works and what we in fact use as money today can shed light on how price inflation may be controlled.