Revised Response to: What are the best goals for the FED? Should it lean toward restraint or toward expansion?

In the economy, many questions are asked on what the U.S. should do to have an economic growth. Economists argue back and forth on the topic of what will expand the economy and what will make it go into a recession. Some economists believe that a stimulus will lead to monetary expansion and that was evident in January 2001 when the Fed lowered its rate from 6.5 to 3.5 percent. Other economists believe that expansion and not holding back will lead to an increase in the growth of the economy. In this case, interest rates were increased which caused costs of borrowing to rise and will result in a contraction.The side that has the stronger case is the restraint because it focuses on the present rate of the economy and not what can happen in six months. When lowering the Federal Funds Rate, the costs decrease and the cost of living declines too causing price to go down. When there is a restraint occurring it steadies out the economy as the costs decrease and production increases and a high stress economy is an afterthought. The average federal funds rate in January was almost 6 percent, well above many market interest rates, while the Treasury's 30-year bond was just 5.5 percent, and all bonds with shorter maturities were even lower. This means that banks cannot borrow Fed funds and relend them with a profit. At this point monetary policy finally became expansive, and the money supply began growing. The strategy to lower the fed funds rate and have a stimulus causes a monetary expansion and the economy grows.