Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Financial Accounting Expert

‘Everyone believes the Fed's job is to fight inflation, however right now the Fed is in fact doing everything it can to cause inflation. Why?

It part to assist the economy get cranking again. Inflation gives an incentive for people to spend cash rather than saving it, since if they save it, the cash will lose value rapidly.

Inflation also assists solve another problem, though--our debt problem. The more inflation we have, the less our dollars will be worth. Since our debts are based on a specific number of dollars and not a specific value, the less our dollars are worth, the simpler it will be for us to pay off our debts.

(Imagine owing someone 100 Zimbabwe dollars at a time when the currency is collapsing. When you wait a week, the value of the Zimbabwe dollar will have subsided, and you'll be capable to pay off your 100 Zimbabwe-dollar debt with currency that is only worth half as much as it was the week ere).

The Fed can't admit that one reason it wants high inflation is to lessen the real burden of our debt, but you can bet that that's one of its objectives and aims. What's more, says Nobel-winning economist Paul Krugman, inflation must be one of the Fed's objectives and aims. Since that's how we've gotten out from under debt burdens in past."

Fed has been pumping money into the economy after the recession to excite the economy. Why does that create the expectation of higher inflation in the future for investors? How does that affect a country's currency value? Remember the relation with China and US. China is a net investor in US assets and US is the net borrower of capital from China. Will China be happy with Fed's recent monetary policy? Why? Does printing money create sense from the US perspective given its debt situation? Why?

Financial Accounting, Accounting

  • Category:- Financial Accounting
  • Reference No.:- M93798

Have any Question? 


Related Questions in Financial Accounting

Xyz corporation which applies manufacturing overhead on the

XYZ Corporation, which applies manufacturing overhead on the basis of machine-hours, has provided the following data for its year 2016 operations: Estimated manufacturing overhead $239,500 Estimated machine-hours 4,500 A ...

Break-even sales and cost-volume-profit chartlast year

Break-Even Sales and Cost-Volume-Profit Chart Last year, Gelbin Inc. had sales of $263,900, based on a unit selling price of $130. The variable cost per unit was $100, and fixed costs were $42,300. The maximum sales with ...

On september 1 2010 the company issued a short-term note

On September 1, 2010, the company issued a short-term note for $3000 and on the same date retired the note that was outstanding at the beginning of the period. The old note had a 10% interest rate, had been issues on Sep ...

Bull if the effect of the credit portion of an adjusting

• If the effect of the credit portion of an adjusting entry is to increase the balance of a liability account, which of the following statements describes the effect of the debit portion of the entry? a. Increases the ba ...

Which of the following cost items should be classified as a

Which of the following cost items should be classified as a prevention cost on a cost of quality report? A. Warranty expenses on defective products. B. Technical support provided to suppliers C. Supervision of quality in ...

A local pest control company has purchased equipment

A local pest control company has purchased equipment costing $150,000 with an estimated lifetime of 7.5 years using straight line depreciation. Additional fixed costs per year are $100,000. Variable costs per pest contro ...

The following cost data were taken from the records of a

The following cost data were taken from the records of a manufacturing company:  Depreciation on factory equipment                                  $   500       Depreciation on factory building                           ...

Tammy a resident of virginia is considering whether to

Tammy, a resident of Virginia, is considering whether to purchase a North Carolina bond that yields 4.6% before tax. She is in the 35% Federal marginal tax bracket and the 5% state marginal tax bracket. Tammy is aware th ...

Ajax ltd in 2012 reported an amount of 45m in accounts

Ajax Ltd, in 2012, reported an amount of $45m in Accounts Receivable, which was up from $39m in the previous year.  Inventories were also up on the previous year, being $25m in 2012 as compared with $21m in 2011.  This i ...

Horizontal analysis is a technique for evaluating a series

Horizontal analysis is a technique for evaluating a series of financial statement data over a period of time: a) that has been arranged from the highest number to the lowest number b) to determine the amount and/or perce ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate