The Federal Reserve has announced that it has cut the Fed Funds rate by 25 basis points to 2.0%.
This is the 7th cut in the target fed funds rate since September 18, 2007. It has resulted in annualized money supply growth of 12.6%. Before the current round of rate cuts started, the target rate stood at 5.25%.
Source: NationalEconomist
Tags: Fed, Federal Reserve, Inflation, money supply
(AXcess News) - Gas pumps in the United States tell the same story as rice prices in Thailand: Inflation is a global phenomenon this year.
Oil hit a record $112 per barrel this week, and a United Nations official warned of continued pressure on food prices, which by one index are up 45 percent in the past year.
The challenges are worst in developing nations, where raw materials account for a larger share of consumer spending. But another factor - the sagging value of the US dollar - means that imports cost more in America and other nations that peg their currencies to the dollar.
Still, regardless of this currency phenomenon, several broad forces are pushing prices up.
After years of strong global economic growth, prices of oil, grains, and some metals have spiked. Investors are adding fuel to that fire by buying up hard assets like commodities, which are viewed as a hedge against inflation.
More fundamentally, many nations have been relatively loose in the creation of money supply. For all the news about interest-rate cuts by the Federal Reserve, this trend goes well beyond US shores. Continue reading »
Tags: Bank of England, barrel, China, Commodities, Dollar, economists, Fed, Food Prices, Global Insight, grains, IMF, Inflation, International Monetary Fund, investors, money supply, Oil, Recession, Thailand, UN Food and Agriculture Organization, United Nations
Cleaning up the mess that Mr Greenspan left behind was never going to be easy. Banks and brokers around the world face more than half-trillion dollars in write-offs as a consequence of the US sub-prime mortgage crisis, which is spreading from the US property market and roiling global stock markets. It’s toppled the US economy into a recession and the tremors are also rattling Asian stock markets.
Roughly $7 trillion has been wiped from world stock markets since the beginning of the year amid fears of a severe US economic recession and financial institutions reporting more mega losses. “The market crisis will preoccupy us well into 2008,” he said German Finance Minister Peer Steinbrueck on Feb 15th. “The financial risks securitized by banks contained packaged explosives,” and he accused rating agencies of having a conflict of interest in the role they played in the process.
So far, the Bernanke Federal Reserve has pumped more than half-a-trillion dollars into the markets with open market operations and special emergency lending schemes, to help cushion the blow to the US economy and stock markets. However, there’s evidence that the Fed’s prescription for dealing with the sub-prime debt crisis, is actually making matters much worse, and leading to “Stagflation.” Continue reading »
Tags: Alan Greenspan, Ben Bernanke, Bill Clinton, Bubble, Central Bank, China, Commodities, Dollar, Economy, Fed, Federal Reserve, Inflation, money supply, Nasdaq, Oil, Oil Prices, Recession, Stagflation, Stock Market
