What’s at stake in the inflation debate? | Mark Weisbrot

whats at stake in the inflation debate mark weisbrot

Sumary of What’s at stake in the inflation debate? | Mark Weisbrot:

  • Monetary policy is decided by the Federal Reserve, which sets short-term interest rates;
  • and currently also directly influences long-term rates (including those paid on home mortgages).
  • Over time, the Fed’s interest rate policy is the most important policy determining how much employment and unemployment we have.
  • This is because of the effect of interest rates on economic activity – for example, note the recent boost that the housing market has gotten from low mortgage rates.
  • But most importantly, the Fed has typically raised interest rates when it decided that unemployment had gotten “too low”, thereby setting a limit on how close we can get to full employment.
  • The Fed actually caused most of the recessions that the US experienced since the second world war, by raising interest rates.
  • His argument is directed at the size of both the expansionary fiscal and monetary policy – ie the Fed’s zero short-term interest rates plus money creation (“quantitative easing”), and the very large federal budget deficit.

Want to know more click here go to source.

From -

Generic selectors
Exact matches only
Search in title
Search in content

Site Language

By continuing to use the site, you agree to the use of cookies. more information

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.