Fed's arsenal against inflation & weak dollar

[gevorg]

Do you think the fear of weakening dollar and a major inflation in the near future is exaggerated? It seems the Fed can tackle any major inflation swings by increasing the interest rates to 10-15% or so. The lending will go down of course, but the dollar will maintain its worth and worldwide currency status.

Of course the effect of inflation will always be there but not anywhere near hyperinflation some gold rushers screaming about.

 

[miketheidiot]

a weak dollar is not the same as inflation, infact its pretty arbitrary and relative term, and simply refers to a currencies relative worth to other currencies relative to the past relationship between those currencies.

The treasury and fed and going after a policy of 'weak' but stable dollar to encourage exports/discourage imports.

 

[ebaycj]

Originally posted by: miketheidiot
a weak dollar is not the same as inflation, infact its pretty arbitrary and relative term, and simply refers to a currencies relative worth to other currencies relative to the past relationship between those currencies.

The treasury and fed and going after a policy of 'weak' but stable dollar to encourage exports/discourage imports.

A weak dollar is the same as inflation if the majority of your goods are imports.

 

[Ozoned]

Inflation, for millions of upside down home morgages, will make the value of the house exceed the amount that is owed on it.

It is also a simple way to steal from whatever entity is financing the federal debt.

 

[Genx87]

I dont think we will know about inflation until about 12 months from now when the stimulus money is kicking in full stride. They will fight it by raising rates.

 

[LegendKiller]

Originally posted by: ebaycj

Originally posted by: miketheidiot
a weak dollar is not the same as inflation, infact its pretty arbitrary and relative term, and simply refers to a currencies relative worth to other currencies relative to the past relationship between those currencies.

The treasury and fed and going after a policy of 'weak' but stable dollar to encourage exports/discourage imports.

A weak dollar is the same as inflation if the majority of your goods are imports.

Which effectively strengthens the dollar by reducing the amount of dollars flowing out of the US.

 

[GTaudiophile]

Isn't raising interest rates, at least a little bit, the answer for helping both the weak dollar and keep inflation down?

 

[StageLeft]

They could jack interest rates and jack up the value of the dollar but the cost to that would be higher by crushing the economy. This is why every economist is repeatedly saying the fed is between a rock and a hard place. It can either keep brow beating the dollar or stifle recovery.

 

[GTaudiophile]

Originally posted by: Skoorb
They could jack interest rates and jack up the value of the dollar but the cost to that would be higher by crushing the economy. This is why every economist is repeatedly saying the fed is between a rock and a hard place. It can either keep brow beating the dollar or stifle recovery.

What about just a quarter or half-point increase? A baby step in the right direction?

 

[Special K]

Originally posted by: Skoorb
They could jack interest rates and jack up the value of the dollar but the cost to that would be higher by crushing the economy. This is why every economist is repeatedly saying the fed is between a rock and a hard place. It can either keep brow beating the dollar or stifle recovery.

I read an article that said there will be intense pressure on the Fed to keep interest rates too low for too long, just like they were after the last recession. Congressmen will point to their regions' unemployment rate and demand that interest rates be kept low.

Am I correct in my understanding that a higher Fed Funds rate will theoretically lead to fewer business loans, which would in turn lead to fewer projects being started, fewer workers being hired, which keeps growth from occuring?

Obviously a rate that is too low leads to asset bubbles.

 

[Colt45]

Make-believe seems to be pretty effective so far.

 

[rchiu]

Originally posted by: Special K

Originally posted by: Skoorb
They could jack interest rates and jack up the value of the dollar but the cost to that would be higher by crushing the economy. This is why every economist is repeatedly saying the fed is between a rock and a hard place. It can either keep brow beating the dollar or stifle recovery.

I read an article that said there will be intense pressure on the Fed to keep interest rates too low for too long, just like they were after the last recession. Congressmen will point to their regions' unemployment rate and demand that interest rates be kept low.

Am I correct in my understanding that a higher Fed Funds rate will theoretically lead to fewer business loans, which would in turn lead to fewer projects being started, fewer workers being hired, which keeps growth from occuring?

Obviously a rate that is too low leads to asset bubbles.

Yeah this is bad for long term economy. Fed is suppose to be independant, but recently fvcking politicians are having too much influence over Fed and their policies. While interest rate can affect business spending and unemployment, it is not the only factor. If the high unemployment rate is casued by other factors, playing around with interest rate is like giving a patient the wrong medicine. You won't fix the problem but still take on all the side effect.

traditionally the unemployment rate after a recession has more to do with business being more cautious and not want to hire right away and not with high rate/expensive to borrow capital. So keeping interest rate low isn't the right medicine and will naturally lead to future problems. All these fvcking politicians should keep their political interest out of Fed and let professionals handle the business.

 

[HannibalX]

Originally posted by: gevorg
Fed's arsenal against inflation & weak dollar .

They can start burning money and that's about it. They created the problem but aren't keen enough to realize it.

 

[StageLeft]

I wonder if the US will be, long term, stuck in the same rut Japan has been for so many years. Japan's response to their last recession was to lower rates and they've been extremely low for many years with Japan unable/unwilling to raise them up, and Japan's growth has been retarded in comparison to other nations. Is this the fate of the US? Is slashing rates to stave off major crisis a one-time deal?

 

[LegendKiller]

Originally posted by: iFX

Originally posted by: gevorg
Fed's arsenal against inflation & weak dollar .

They can start burning money and that's about it. They created the problem but aren't keen enough to realize it.

Yeah, and you are so much more "keen" than the best economic minds in history.

BTW, how many billions are you worth?

 

[Ausm]

Originally posted by: iFX

Originally posted by: gevorg
Fed's arsenal against inflation & weak dollar .

They can start burning money and that's about it. They created the problem but aren't keen enough to realize it.

If you want to burn your money ,please send it my way

 

[rudder]

Originally posted by: Skoorb
I wonder if the US will be, long term, stuck in the same rut Japan has been for so many years. Japan's response to their last recession was to lower rates and they've been extremely low for many years with Japan unable/unwilling to raise them up, and Japan's growth has been retarded in comparison to other nations. Is this the fate of the US? Is slashing rates to stave off major crisis a one-time deal?

Japan also threw trillions at infrastructure projects to stimulate their economy... hmmm.

 

[bamacre]

Originally posted by: Skoorb
Is slashing rates to stave off major crisis a one-time deal?

No, look what Greenspan did.

 

[Ausm]

Originally posted by: bamacre

Originally posted by: Skoorb
Is slashing rates to stave off major crisis a one-time deal?

No, look what Greenspan did.

Yeah and he left to low for to long and that helped exacerbate the housing bubble.

 

[Jaskalas]

Originally posted by: Ausm

Originally posted by: bamacre

Originally posted by: Skoorb
Is slashing rates to stave off major crisis a one-time deal?

No, look what Greenspan did.

Yeah and he left to low for to long and that helped exacerbate the housing bubble.

Now we can exacerbate the government bubble.

 

[piasabird]

Anytime you see a weak dollar you are likely to see the price of Gold rising. When this happens, Everything from Gas to Groceries to air travel to transportation of supplies to production costs rise. The way to control a weak dollar is to talk up the strength of the dollar by having confidence in a brighter future and to cut back on expenses.

Unfortunately the U.S. Congress is not very good on cutting back on expenses. O'Bammah does not know the meaning of spending less money. I suggest you just bend over and Kiss the Economy and all US Jobs away. What we really need is lower taxes to attract foreign investors.

 

[First]

Originally posted by: Jaskalas

Originally posted by: Ausm

Originally posted by: bamacre

Originally posted by: Skoorb
Is slashing rates to stave off major crisis a one-time deal?

No, look what Greenspan did.

Yeah and he left to low for to long and that helped exacerbate the housing bubble.

Now we can exacerbate the government bubble.

Hard to exacerbate something that doesn't exist.

 

[BigDH01]

Originally posted by: piasabird
Unfortunately the U.S. Congress is not very good on cutting back on expenses. O'Bammah does not know the meaning of spending less money. I suggest you just bend over and Kiss the Economy and all US Jobs away. What we really need is lower taxes to attract foreign investors.

If you wouldn't mind, could you explain to me how a strong dollar keeps jobs in the US and attracts foreign investors?

 

[sao123]

Originally posted by: BigDH01

Originally posted by: piasabird
Unfortunately the U.S. Congress is not very good on cutting back on expenses. O'Bammah does not know the meaning of spending less money. I suggest you just bend over and Kiss the Economy and all US Jobs away. What we really need is lower taxes to attract foreign investors.

If you wouldn't mind, could you explain to me how a strong dollar keeps jobs in the US and attracts foreign investors?

A strong dollar doesnt attract foreign investors, a weak dollar does... however a strong dollar spurs domestic investment, when trying to kickstart the domestic economy, this is the necessary approach.

 

[BigDH01]

Originally posted by: sao123

Originally posted by: BigDH01

Originally posted by: piasabird
Unfortunately the U.S. Congress is not very good on cutting back on expenses. O'Bammah does not know the meaning of spending less money. I suggest you just bend over and Kiss the Economy and all US Jobs away. What we really need is lower taxes to attract foreign investors.

If you wouldn't mind, could you explain to me how a strong dollar keeps jobs in the US and attracts foreign investors?

A strong dollar doesnt attract foreign investors, a weak dollar does... however a strong dollar spurs domestic investment, when trying to kickstart the domestic economy, this is the necessary approach.

In your first sentence you imply that money will flow from countries with strong currencies to those countries with weak currencies and then you imply that strong American dollars will remain in the US. Why?