The Economy: The Fed as Inflation Fighter

The Feds most important job is making sure there is enough money and credit to allow the economy to grow, but not so much money that Day Trading for Income the currency loses its value. Inflation is the continuing, broad-based rise in the price of goods and services. Put in a slightly different way, inflation is an erosion in the purchasing power, or value, of a nations currency.

The goal of monetary policy is to fight inflation so that sustainable long-term growth can be maintained. One way of doing this is by letting the money supply grow as fast as the economy grows, but no faster. If the money supply grows too rapidly, inflation will result, reducing your purchasing power. This would mean that your dollar, which bought 100 jelly beans yesterday, might buy only 95 today. The Fed fights this decline in purchasing power by influencing the amount of money and credit flowing through the financial system. One way to relieve mounting inflationary Power Principles pressures is by slowing the growth of the money supply. If the Fed expands the flow of money and credit, bankers will be able to make more loans to their customers. If money and credit are restricted, banks will have less money to lend, causing a decrease in the money supply.

Financing

commodity trading training