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Wednesday, October 27, 2010

Ben Bernakne's Policy May Cause Inflation

For the second time since he became chairman in 2006, Ben S. Bernanke is leading the Federal Reserve into uncharted monetary territory.
Bernanke next week is likely to preside over a decision to launch another round of large-scale asset purchases after deploying $1.7 trillion to pull the economy out of the financial crisis, comments from policy makers over the past week indicate. This time, with interest rates already near zero, the Fed will be aiming to increase the rate of inflation and reduce the cost of borrowing in real terms. The goal is to unlock consumer spending and jump-start an economy that’s growing too slowly to push unemployment lower.
Estimates for the ultimate size of the asset-purchase program range from $1 trillion at Bank of America-Merrill Lynch Global Research to $2 trillion at Goldman Sachs Group Inc., with economists at both firms agreeing the Fed will likely start by announcing $500 billion after the Nov. 2-3 meeting. The danger is that once the Fed kindles price increases, inflation will be difficult to control.

7 comments:

  1. We need to return to the Gold Standard, this we can pull money out of our ass isn't going to do any good for anyone. Also I feel a bit uneasy with the banks acquiring extra assets.

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  2. well, they should learn something already...

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  3. The economy is getting better. Bernanke must be pretty good.

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  4. Great stuff. come show some love.

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  5. Might be good, time will tell.

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