Posts Tagged ‘inflation fix’


I can’t believe they are talking about this, there is nothing worst for our dollar and our purchasing power.  What little savings Americans have is being eroded (stolen) while it sits in banks.  Check out the graph below, from a WSJ article, it shows the cliff we are facing.

If this quadruple whammy hits:

tax increases (from Obama and bush tax cuts expiring)(end of year),

Obama care takes effect (end of year),

our trade war with China is escalated (underway), and

the Fed’s Inflation Fix (between now and end of year)

we will go over the edge of the cliff…(just like in 1937…)


Fed Officials Mull Inflation as a Fix

The Federal Reserve spent the past three decades getting inflation low and keeping it there. But as the U.S. economy struggles and flirts with the prospect of deflation, some central bank officials are publicly broaching a controversial idea: lifting inflation above the Fed’s informal target.

The rationale is that getting inflation up even temporarily would push “real” interest rates—nominal rates minus inflation—down, encouraging consumers and businesses to save less and to spend or invest more.

Both inside and outside the Fed, though, such an approach is controversial. It could undermine the anti-inflation credibility the Fed won three decades ago by raising interest rates to double-digits to beat back late-1970s price surges. “It’s a big mistake,” said Allan Meltzer of Carnegie Mellon University, a central bank historian. “Higher inflation is not going to solve our problem. Any gain from that experience would be temporary,” adding that the economy would suffer later.


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