Readers Question: Why does the federal reserve buy treasuries? Isn’t that just taking money from one pocket and putting it in another? There are a few reasons the Federal Reserve is buying treasuries. With recession and falling velocity of circulation, the Money supply adjusted for velocity of circulation is showing deflation. Therefore buying Treasures and …
Readers Question: Hey, what do you think are the implications of the 2009 Budget? The most striking feature was the realisation of how much the government was needing to borrow and the depth of the recession. The Large planned rise in borrowing means that there is little if any scope for further discretionary fiscal expansion. …
The government has announced a bold move to buy upto £50bn worth of shares in major UK banks. The cost will be borne by the UK taxpayer and averages at around £2,000 per UK taxpayer. £50bn is a huge sum for the treasury when you consider the annual NHS budget for 07/08 was £89bn. The …
Readers Question: How about the case of cost push inflation like that of China? there’s high inflation and yet the economy is not operating at its full level of employment and due to the fact that its exchange rate is fixed, monetary policies would not be effective but fiscal policies would further increase unemployment. What …