Commodity Trade Mantra

Posts Tagged ‘Monetary Growth’

What Role May Trumps' Policies Play in Creating Inflation

Among the main drivers of higher inflation expectations, one is the idea that a larger fiscal deficit will inevitably lead to higher inflation. The Trump program calls for higher defense expenditures and increased infrastructure spending. The perception in the financial markets is that fiscal spending and tax cuts add up to higher deficits, which would almost certainly imply higher inflation.

There is No Tradeoff Between Inflation and Unemployment

Increasing money supply spurs economic growth & that will cause inflation. But if monetary expansion slows, economic growth may stall & unemployment will rise. The Fed will never be able to trade higher price inflation for lower unemployment. Nor can it sacrifice higher unemployment for lower price inflation.

The Adverse Effects Of Monetary Stimulation

The problem for central banks is that the alternative to maintaining an increasing pace of monetary growth is to risk triggering a widespread debt crisis involving both over-indebted governments and also over-extended businesses and home-owners.

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