Complexities of the U.S Government
Alphonzo W Brown
Strayer University
Fin 100
Professor Lewis

Complexities of the U.S Government

The U.S. financial system is very complex and it is impacted by several environmental influences, including federal regulations, fluxuation in world markets, and our economy. These factors not only affect the economy, but also businesses and individuals. The U.S. Federal Reserve, the Federal Reserve Chairman, and Board, also play a direct role into the effectiveness of today’s economic environment. Some of the complexities that impact the U.S. also have a direct influence on the global financial environment. These complexities include the interest rates and the exchange rate. The U.S. financial market has a major impact the economy, businesses, and individuals. Financial markets help to masterfully direct the flow of savings and investment in the economy in ways, that initiate the increase of capital and the production of goods and services. The worth of credit and returns on investment provide signs to producers and consumers. These signs help direct funds from savers and businesses to the consumers, businesses, governments, and investor. Also, the existence of healthy financial markets and institutions also accelerates the international flow of funds between countries. In addition, efficient financial markets and institutions tend to lower search and transactions costs in the economy. By providing a large range of financial products, with fluctuating risk and pricing structures as well as maturity a well-built financial system offers products to if the economic indicators show recession, the markets typically turn down, particularly the equity markets. Currency markets, FOREX or foreign-exchange markets, and the mortgage markets will move in response to the health of the economy and the movement of interest rates. Should those economic indicators prove to be positive, then the markets turn upwards or even “fly”. When the markets experience an intense downturn, it can lead to a severe recession or if longstanding enough, a depression. With the prices of financial assets declining sharply, which can cause individuals, businesses, and financial institutions to become less able to handle their debt payments or it can even lead to financial system failure with widespread bank closures and mortgage foreclosures in extreme cases such as the 2008-09 financial crisis (Lehman Bros collapse), when the U.S. Government and the Fed were required to step in and take action to prevent total system failure. The U.S. economy still hasn't fully recovered. The U.S. Federal Reserve Is a Central Bank of the U.S. and is responsible for monetary policy and regulating the banking system that provide borrowers and lenders with a close match for their needs. The government is reliant on forecasting market trends around the world that either adversely affect the market, or increase certain sectors that prove profitable.

References
Last Name, F. M. http://www.economist.com/news/schoolsbrief/21584534-effects-financial-crisis-are-still-being-felt-five-years-article. http://www.theguardian.com/business/2008/dec/28/markets-credit-crunch-banking-2008 1