The Federal Reserve, Congress, and the Use of Context in Economic Policy

This chapter discusses where context is currently used, such as Federal Reserve policy, and where context is not used or is misused, such as in formulating tax policy and producing budgets. The reality that decisions have to be different given the context in which they are made is not limited to individuals and executives. Context is probably the most important concept in all aspects of the economy, especially public policy. It includes fiscal policy, which is the result of the many strange ways that Congress and the president come to an agreement on spending and taxing levels, as well as monetary policy, which is made by the Federal Reserve. The importance of public policy is that it has a major impact on businesses and households. However, public policy has a major effect on how corporations operate. The reason that some policies miss the mark usually stems from a failure to develop and implement them in the context of where the economy is and where it is going.