Listen or read the follow article. What is inflation. How does the federal reserve affect inflation rates? Why might the current interest rates cause an increase in inflation. What is the potential negative if the federal reserve tries to slow inflation rate? What advice would you give Ben Bernanke? Why?
8 Comments
Alex Quirici
2/29/2012 12:23:32 pm
In the article Record Low Rates Raise Inflation Concerns, the issue concerning the risk of lowering rates may end up causing a national inflation to take place is addressed. Inflation is when there is a general rise in prices and services in an economy. The Federal Reserve affects inflation rates by lowering interest rates in order for it to be easier to borrow money from the government. The current interest rates may cause inflation because the concept is to try to achieve maximum employment and have stable prices. These two ideas usually conteract one another because you only have one of them. If the Federal Reserve tries to slow the inflation rate it could end up resulting in a rise in inflation which in the end would cause rates to rise again. if i could, i would advise Ben Bernanke to keep pushing his cause and lower rates little by little so there will be no major problems so we can learn from our observations.
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Ken Marsh
3/1/2012 03:50:06 am
In Annie Baxter's article "Record Low Interest Rates Raise Inflation Concerns,"the main idea is that lowering interest rates too low may cause the United State's inflation rate to increase as a whole. Inflation is known as a significant increase in the general level of prices for goods and services. When the inflation rises, every dollar you own buys a smaller percentage of a good or service. The Federal Reserve helps out the public by lowering interests rates to people like you and me who'd like to borrow money from the government. Unfortunately the Federal Reserve may bring about Inflation, due to its low interest rates. If the Federal Reserve tries to slow the upcoming inflation, they will have to raise interest which will be a big negative aspect for them, and may cause more inflation as well, which would kill their cause for stable prices. My advice to Ben Bernanke would be don't do anything hasty, if he is going to continue to lower the rates slowly, do it in small increments and try to stay away from too much inflation at all costs, even though we already see inflation in everday life, keep it to a minumum please.
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Sarah McClure
3/1/2012 11:37:53 am
In the article “Record Low Interest Rates Inflation Concerns” by Annie Baxter interest rates and inflation are discussed. Inflation as a whole is referred to as a significant increase in prices for goods and services. The Federal Reserve has an affect on interest rates because it has the job of helping the public by lowering interest rates for people that want or need to borrow money from the government but can’t necessarily do so with sky-high interest rates. One important part of the article is if the Federal Reserve lowers interest rates too much it can lead to a nation wide inflation of interest rates, which would be the opposite of what they were trying to achieve. The current interest rates might cause an increase in inflation because the goal is to achieve maximum employment and also stable prices, but those two things don’t always go hand in hand, which can cause an issue. If the Federal Reserve isn’t careful with trying to slow the increase in interest rates, it can lead to inflation, which in turn delivers increased prices. My advice to Ben Bernanke would be to continue doing what he is doing with slowly lowering interest rates and not doing anything drastic that could lead to dramatic inflation.
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Ian McCaffrey
3/1/2012 11:47:41 am
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services. The Federal Reserve affects inflation rates when they "try to push the unemployment rate down, in other words to increase employment and get the economy to grow faster" this is dangerous because this can "raise inflation" which places the stability goal in jeopardy. These interest rates cause in increase in inflation because the country continues to follow the path of the accommodating monetary policy to go after long-term unemployment or try to bring people back into the labor force who are not currently in the labor force. This triggers a lack of trust in the central bank's ability or willingness to keep that target causing a loss of trust. As for Ben Bernanke, I advise him to h observe economic patterns of the past as a very safe way to guide the change of interests rates, which would safely lower inflation rates. The key is to make changes that will lower the inflation rate, but none so rash as to negatively effect the economy.
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Monica Perez
3/1/2012 12:49:31 pm
In the article “Record Low Interest Rates Inflation Concerns," Baxter claims that if interest rates are lowered it could end up causing a rise in inflation. Inflation is a rise in the general level of prices related to an increase in prices of goods and services. The Federal Reserve affects the inflation rates by lowering interest rates for people who want to borrow money from the government. The current interest rates can increase inflation becuase of the want to increase employment and wanting to keep prices stable. If the Federal Reserve were to lower interest rates it could lead to an inflation of interest rates which is what they don't want to happen. Also if the Federal Reserve tries to slow the inflation rate it will seem as if they aren't confident, as other economists say, and it can backfire and be harmful in return. As for my advice to Ben Bernanke, I agree with Sarah in that if he wants to lower interest rates he should do so slowly, and not do anything to rapid or drastic that could eventually lead to a negative effect in the economy by causing a dramatic inflation.
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Karla Ortiz
3/1/2012 12:50:38 pm
In the article "Record Low Interest Rates Inflation Concerns" the main point they talk about is interest rates and inflation. Inflation is an increase in the general level of prices for goods and services. The Federal Reserve affects inflation rates by lowering the interests rate to make it easier for people to borrow money. The current interest rates might cause an increase in inflation beacause the point is to bring up maximum employment and stable jobs. If the Federal Reserve tries to slow the inflation rate, it may lead to a rise in inflation, which will maybe end up in an increase in prices. My advice to Ben Bernanke would be for him to try and lower the rates slowly so there won't be any problems and to try and avoid inflation.
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Monica Olguin
3/1/2012 12:53:54 pm
In the article, “Record Low Interest Rates Raise Inflation Concerns,” by Annie Baxter, emphasizes on the possibility that the United States’ inflation rate will most likely increase if interest rates are lowered too much. Inflation is defined as a significant increase in price of both services and products. People who have to take out a loan from a bank depend on the Federal Reserve, because the Federal Reserve controls the drop or rise in the interest rates. The main goal is to successfully lower interest rates nation-wide, but this has been a challenge because our nation is striving for an increase in employment while maintaining stable prices. The Federal Reserve needs to be cautious, because a rapid employment rate increase may endanger the idea of stability by inflation, resulting in lack of trust with the central banks. Ben Bernanke has a difficult job, trying to figure out the best way to achieve higher employment rates and not trigger inflation. However, I think he’s on the right track and lowering inflation rates in miniscule amounts is the safest route to take at this point. When the economy is as fragile as it is, we wouldn’t want anyone to take drastic measures that could send our economy downhill.
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Nick McMaster
3/1/2012 01:06:42 pm
In the article Record Low Rates Raise Inflation Concerns, the main concern is that by lowering interest rates in hopes making them more appealing to people so that they will be more willing to borrow and spend money, may cause the inflation rate in the U.S. to raise. Inflation is a persistent, substantial rise in the general level of prices related to an increase in the volume of money and resulting in the loss of value of currency. The Federal Reserve lowers interest rates to make it easier on people to borrow money and therefore spend money, all with the goal of increasing employment while maintaining stable prices. It is very difficult to Increase employment and maintain stable prices because the two directly interfere with each other. If the Federal Reserve continues to lower interest rates then more inflation could occur and raise rates, being completely counter productive to the ends of increased employment and keeping stable prices. I would advise Ben Bernanke to tread carefully and keep the experiments very small so that they won't largely impact anything, it'd be in his best interest not to rock to boat until it capsizes.
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