Federal government of different regulates money and credit and their supply with the help of some tools. The main tool is the open market operations. This is intended at controlling the government securities through their buying and selling. Money supply is increased by buying the securities from banks or individuals. A check is given to these businesses or individuals for paying in return of the securities. In case of a condition to regulate the money supply in the country, the government sells the securities to banks. This will collect reserves for the government. The banks will reduce the lending which will drop the money supply in the country.
The federal government of US makes money with the help of the income taxes from individuals. The federal income tax by the US government is levied on the income of the US citizens worldwide. This is also charged on the aliens who are residents in the country and also on some non-resident US citizens. The Commissioner of the Internal Revenue collects the taxes through his office. The law of taxation is enforced through property seizing and collecting the income of non-payers or by prosecution policies. This was established by the tax law introduced in the year 1862. The role of commissioner and his powers remain the same even today in the country.
The US government has strong policies to regulate the nation’s economy. The fiscal policy of the federal government is aimed at regulating taxes and spending in the nation. The spending plan known as budget is issued by the president of the country to the Congress. The makers of law then analysis this budget in accordance with the total level of spending and taxes. This is then divided into various sections. This is then used to evaluate what proportion of money is used for various purposes. At the end the bill is signed by the president to bring it into effect.
US economy is properly regulated by the monetary policy of the federal government. This was intended at controlling the supply of money using various methods like changing interest rates. The final aim of this monetary policy was to maintain inflation at the lowest level and ensure high economic growth. This will keep the unemployment rate of the nation low. A stable currency and monetary policy was achieved with the help of the Federal Reserve which is the independent central bank formed in US. This is why US currency, dollar remains stable as compared to the currencies of other nations and is used by them.
US economy has a great intervention from private firms, yet they are under the control of the government of US. This regulation is mainly done in two ways. The economic regulation is done directly or indirectly. Monopolies were prevented by regulating the price of certain utilities and products beyond a maximum level of profit making. Market forces were under the control of the antitrust law.
Social regulations were extended to ensure that public health and safety is considered by controlling the private companies. Regulation of drugs and food products reaching the market was done by the government. Air, land and water was regulated by certain standards.