Inflation’s Role in Economic Performance: The Federal Reserve’s Influence

Authors: Brodie Loftus, Mojtaba Seyedian

SUNY Campus: SUNY Fredonia

Presentation Type: Poster

Location: Old Union Hall

Presentation #: 44

Timeslot: Session B 10:15-11:15 AM

Abstract: This study investigates the Federal Reserve’s monopolistic control over the U.S. money supply as a primary driver of inflation and its broader impact on economic performance. The central thesis posits that the Fed’s monetary policies, particularly deficit monetization, shape inflationary trends, influencing key metrics like Gross Domestic Product, unemployment, interest rates, and exchange rates. The methodology integrates historical data analysis—such as U.S. inflation peaking at 13.5% in 1980 and the Fed’s balance sheet doubling from $4 trillion to $8 trillion (2020-2022)—with comparative policy evaluations from economically stable nations. Findings reveal inflation’s dual nature: moderate levels spur growth, while excessive rises, often tied to the Fed’s post-1907 Panic mandate enabling government overspending, erode purchasing power and redistribute wealth from savers to debtors. High inflation also fosters economic uncertainty, as evidenced by sharp price jumps like 11.1% in 1974. The study concludes that curbing inflation requires ending deficit monetization to enforce market-driven bond pricing and strengthening Fed autonomy through structural reforms. Its significance lies in reframing inflation as a policy choice, not just an outcome, offering actionable insights for balancing monetary discipline with growth. This research, pending approval from secondary authors and SUNY faculty mentors, underscores the need for nuanced economic management in an era of fiscal complexity.