3/19/2009

Fed's plan to print $1.2 trillion in new cash to inject in the economy

There will clearly be an increase in inflation. This is one thing that the government can do to stimulate the economy. But at what cost?

IBD Editorials:
Monetary Policy: The Federal Reserve's plan to create $1.2 trillion out of thin air to buy Treasuries is a risky move, to say the least. If it doesn't boost output by an equal amount, the certain result will be inflation.


1) Inflation
2) an increase in employment, but mainly from people making mistakes on what jobs that they should take. Jobs that will hopefully be eventually left.
3) This is something third world countries have tried to do over time. Get a lot of debt and then create inflation so that the value of the debt is reduced in real value. This increases the risk of US debt in the future. This is essentially theft.
4) Real interest rates will rise right now because we are taxed on nominal and not real interest.

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