inflation

A Central Bank’s Toolkit to fight a Depression

Leave a Comment / Government / By

I know as you read this, you are aware that America and the world are currently experiencing an economic crisis. Many economic experts say we could be heading towards a worsening recession or even a depression. In this article, I have listed a few tools that a government has at its disposal to pull itself out of a recession and even avoid a depression. It’s good to be aware of the intervention tools governments use to prop up an economy in order to better protect your wealth and purchasing power.

A Central Bank’s Toolkit to fight a Depression Read More »

Saving the Banks will Accomplish – Nothing

Leave a Comment / Government / By

The old saying is that during a deflation cash is king. This is because as prices fall money becomes more valuable (i.e. it buys more). So it makes sense to hold onto it as long as possible and wait for it to increase in value. Because people hold onto their money it becomes scarce and harder to come by.

During a deflationary recession people also hold onto their money because they are uncertain about the continued supply of money (will they lose their job due to the recession, etc) so they in addition to holding money for appreciation, they are also “saving for a rainy day”.

Conversely during inflationary times money is becoming less valuable (buys less over time) so people want to get rid of it before it loses too much purchasing power and they even borrow as much as possible so they can pay it back with less valuable dollars. Keep that in mind as you read Andy Gordon’s excellent article on why bailing out the banks won’t help the economy. ~ Tim McMahon

Saving the Banks will Accomplish – Nothing Read More »

Scroll to Top