Who in the United States is responsible for maintaining the money's purchasing power?

Asked on by sara212

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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Really, the whole US government is responsible in some way for maintaining the purchasing power of the dollar.  Perhaps the most responsible entity is the Federal Reserve, which is the central bank of the US.  However, Congress and the President play a role as well.

The Fed plays a large role because it helps to control the money supply in the US.  When the Fed increases the money supply, for example, the purchasing power of the dollar can decline.  Congress also has an impact on the purchasing power of the dollar.  This is because it controls (along with the president) the nation's fiscal policy.  We can see this happening today as the elected branches argue over raising the debt ceiling.  If they are unable to come to agreement, economic chaos may ensue and the purchasing power of the dollar may collapse.

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