Re: When should the Fed act against inflation?

puntontg <tomrules111@xxxxxxxxxxx> wrote:
The control of inflation through the use of interest rates on borrowed
reserves is a very inappropriate instrument to control inflation in that
the real economy must suffer greatly before the corrections can be
achieved. Appropriate tax policy can be a far superior tool. Also
see:

http://GreaterVoice.org/econ/glossary/inflation.php

First of all this link is the moneterist view on inflation and
therefore is just one cause or theory of how inflation takes place. And
it is true that if interest rates are already high then bringing them
lower with interest rates would mean the economy would suffer (however
some people believe this is the lesser of two evils in the long run).
However for controlling interest rates so that inflation does not rise
rise, can be effective as it can just slow the rate of growth, not
actually making it negative. This will only be the case if the
inflation is demand pull in nature, and there are problems with using
fiscal policy such as it is difficult to know how people may react to
tax changes.


The Fed has nothing to do with tax rates. It is limited to monetary
policy.
.

Relevant Pages

  • Re: Greek riots - a convincing explanation
    ... have but he has this cultivated reputation for financial management ... who will suffer to sort it out. ... Many people with savings have little other choice. ... That sounds about right w/r/t consumer inflation. ...
    (uk.politics.misc)
  • Re: When should the Fed act against inflation?
    ... Appropriate tax policy can be a far superior tool. ... First of all this link is the moneterist view on inflation and ... lower with interest rates would mean the economy would suffer (however ...
    (sci.econ)
  • Re: When should the Fed act against inflation?
    ... the real economy must suffer greatly before the corrections can be ... Appropriate tax policy can be a far superior tool. ... First of all this link is the moneterist view on inflation and ... lower with interest rates would mean the economy would suffer (however ...
    (sci.econ)
  • Re: OT: Obamas Use of Complete Sentences Stirs Controversy
    ... real economy. ... the banks become ever more powerful. ... the government takes over the banking function and charges little or no ... What has been happening now is inflation. ...
    (rec.music.classical.guitar)
  • Re: When should the Fed act against inflation?
    ... the real economy must suffer greatly before the corrections can be ... Appropriate tax policy can be a far superior tool. ... First of all this link is the moneterist view on inflation and ... is a rise in the price of goods or a decrease in the value of money. ...
    (sci.econ)