The Treasury In The Financial Markets参考.ppt

The Treasury InThe Financial Markets ? Learning Objectives ? To examine the many important roles played by the government’s Treasury Department. To identify how the government raises new funds and how it spends the funds raised. To understand how the activities of the Treasury Department impact the money and capital markets and the economy. To explore two key government policy tools – fiscal policy and debt management. Introduction The U.S. Treasury Department exerts a potent impact on the financial system through its fiscal policy – the taxing and spending programs of the federal government designed to promote various economic goals, and debt management policy – the refunding or refinancing of the federal government’s debt in a way that contributes to its economic goals and minimizes the debt burden. The Fiscal Policy Activities ofThe U.S. Treasury Congress dictates the amount of funds the federal government will spend each year on programs like welfare and national defense, and also determines the sources of tax revenue and tax rates. When tax revenues are not sufficient to cover expenditures, a budget deficit occurs. A budget surplus occurs when government revenues exceed expenditures. The Fiscal Policy Activities ofThe U.S. Treasury The Fiscal Policy Activities ofThe U.S. Treasury The Fiscal Policy Activities ofThe U.S. Treasury Recent Tax and Expenditure Legislation The Economic Recovery Tax Act (1981) aimed to simulate savings and business investment in order to reduce inflationary pressures in the economy. The Gramm-Rudman-Hollings Balanced Budget and Emergency Deficit Control Act (1985) mandated reduced budget deficits. The Economic Growth and Tax Relief Reconciliation Act (2001) was designed to encourage the public to save more. The Fiscal Policy Activities ofThe U.S. Treasury Effects of Government Borrowing Borrowing from the nonbank public higher incomes, spending, and interest rates Borrowing from depository institutions no change in the money sup