Far
too many Americans are not concerned about the news of Federal
Reserve activity. They ought to be because it affects their
pocketbook and those of their children and further descendants.
A simple lesson: When the Fed buys bonds it creates reserves for the banking system, which in effect creates paper money or credit. When times are bad and business has no use for that credit, the Fed’a action is useless. But once a recovery takes place, all that paper money that’s been created spells INFLATION.
When the Federal Reserve sells bonds it tightens the money supply but once the barn door has been opened, the escaped horses of inflation have taken over the economy. (See the Earl J. Weinreb NewsHole® comments.)
A simple lesson: When the Fed buys bonds it creates reserves for the banking system, which in effect creates paper money or credit. When times are bad and business has no use for that credit, the Fed’a action is useless. But once a recovery takes place, all that paper money that’s been created spells INFLATION.
When the Federal Reserve sells bonds it tightens the money supply but once the barn door has been opened, the escaped horses of inflation have taken over the economy. (See the Earl J. Weinreb NewsHole® comments.)
No comments:
Post a Comment