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Federal Reserve and Monetary Policy Part 13 of 13

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.

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Challenges for Monetary Policy Part 1 of 14

Thank you, Charlie Plosser. I am grateful for the invitation to speak to the Global Interdependence Center.

I am going to take advantage of this podium to provide the Dallas Feds point of view, from a global perspective, on the issue that preoccupies President Plosser and me and our colleagues on the Federal Open Market Committee. That issue is the conduct of monetary policy given our current economic predicament. If you will indulge me, we can address other Forex Autopilot issues of global interdependence in the Q&A session. Before I get started, let me go on record as having said that, as always, I speak today only for myself and not for the Federal Open Market Committee, its members or the Federal Reserve System.

First, a word about Philadelphia. I spent a tad more than my Fed per diem last night and stayed at the Ritz Carlton at Broad and Chestnut. Before it became a hotel, that monumental building housed the old Girard Trust Company. True Philadelphians know the rock-solid Forex Power Strategy Course financial legacy of Stephen Girard. In 1811, he bought the remaining shares in the First Bank of the United States and renamed it Girards Bank.

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