Complexities of the U.S. Financial System

Complexities of the U.S. Financial System

Introduction

The US financial system is considered as one of the most important and vibrant financial system in the whole world. The financial system of US is also regarded as the most flexible and policy oriented in nature. The size of the US financial and economic system is too large and that most of the time a single effect or reform can wholly change the system (Jorgenson, 2001).

Highlights of the US Financial Market

The financial industry is comprised of Stocks, Bonds and other trade securities within the whole world. Banks, financial institutions and mutual funds are there to channelize the funds of investors. These funds received from the investors are then invested in different government bonds and investment schemes to generate profit for them.

Keeping in view the flexibility and strength of the US financial system it has its own flaws also because of the system is financial strong and flexible then it has to address the financial crises of 2008 prier to it happening (Kim, 1999).

Impact of US financial market on Economy

The US dollar is the widely traded currency all over the world on the other hand; the size of the economy is also bigger and greater than any of the economy. Being bigger it also has a greater impact on every economy. According to the financial analyst of NYSE most of the countries start their trade activities with the US market, because US economy is the biggest buyer of goods throughout the world. The figures and the data tell us that US economy imports 92% of the goods from all over the world. In this manner it has a great impact on others economies too(Ausubel, 1997).

An increase in the basic rate of US fed reserve also had a great impact on others economy. If the US buyer purchases more loans from FED then they have more money to purchase goods and services (Kim, 1999).

To keep inflation stable and support the recovery, the Federal Reserve will keep up its plan to inject money into the economy by introducing a stimulus effect on the economy, with the aim of lowering the level of unemployment, one of their assignments.

The asset purchase program by the Fed, led by Ben Bernanke, provides for the purchase of debt securities at a pace of 45 billion dollars a month, to which are added 40 billion dollars ...