Last Monday, the Federal Reserve unveiled its new “term deposit facility” as another tool to fight inflation.
It was reassuring to note that the Fed has finally defined inflation’s causes properly: as a continuing rise in the general price level usually attributed to an increase in the volume of money and credit relative to available goods and services.
With the enormous increase in money and credit that the Fed has engineered over the past year, concerns are being raised about the coming rise in the general price level. These concerns are being reflected in the recent declines in the bond market as investors appear to be demanding higher interest rates to offset some of that anticipated rise.
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