The government is spending a lot of money it doesn’t have. Should we be worried about inflation? How do debts and deficits affect inflation?
Evidence says the Fed is not “out of control”
The stock market has declined a lot in the last two days, and the President has implied that it’s the Federal Reserve’s (the Fed’s) fault: the Fed is “so tight” (that is, the Fed is raising interest rates too fast and / or too much), and it is “out of control.” The Federal Reserve is [Learn more…]
What does it mean to say that the Federal Reserve Bank (the Fed) is raising interest rates?
The credit markets are very complex, and contain many interest rates. The Federal Reserve controls only one or two interest rates. Many factors other than the Fed’s interest rate target influence interest rates. Recent history confirms that future interest rate movements would be hard to predict even if we knew the Fed’s plans. There are [Learn more…]
What do the recent changes in interest rates mean for your portfolio?
Interest rates have risen in the last month or so, and bond prices have fallen. My recent blog posting provides a summary about what these changes mean for your portfolio, your full balance sheet, and your financial situation. Very briefly, you accumulate assets during your earning years to fund spending for college, retirement, and other [Learn more…]
Update on Market Reaction to Evolving Federal Reserve Policy
Last Wednesday, June 19, Ben Bernanke, Chairman of the US Federal Reserve Bank, held a news conference to discuss evolving Federal Reserve policy. I will not try to reproduce the precise language of the FOMC‘s statement, nor to parse or interpret it (the FOMC or Federal Open Market Committee is the Federal Reserve Board entity [Learn more…]