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Special Report on

Inflation, deflation and quantitative easing

inflation deflation and quantitative easing special research report Photo by
Owen Humpage is a senior economic advisor specializing in international economics in the Research Department of the Federal Reserve Bank of Cleveland. His recent research has focused on central-bank interventions in exchange markets, dollarization in Latin America, and the sustainability of current-account deficits. Read full bio Research Assistant Michael Shenk is a research assistant in the Research Department of the Federal Reserve Bank of Cleveland. His work focuses on international topics and housing-market indicators. Read full bio 12.10.08 Owen F. Humpage and Michael Shenk The Federal Open Market Committee has lowered its ...
by encouraging lending by these institutions and reducing the cost of borrowing, thereby stimulating the economy. However, there is a risk that banks will still refuse to lend despite the increase in their deposits, or that the policy will be too effective, leading in a worst case scenario to hyperinflation . 1 Quantitative easing is sometimes described as 'printing money', although the central bank actually creates it electronically 'out of nothing' by increasing the credit in its own bank account. 2 Examples of economies where this policy has been used include Japan during the early 2000s , and the US and UK
Inflation, Deflation, Japan - Paul Krugman Blog -
in the face of a deflationary environment. To do this, he has to come up with a novel theory: that the prices that matter are those of things we buy frequently, as opposed to big-ticket items bought less frequently. And the reason for this is …??? (Remember, there’s a very clear reason for excluding food and energy prices; I have no idea why big-ticket items should receive the same treatment.) Why care about Kellner? Because he represents a significant body of opinion, which is basically worried because of the expansion of the monetary base. Yet both logic and experience show that when you’re in a liquidity ... market research, surveys and trends
What Japan needs to do to end deflation | East Asia Forum
Cannot modify header information - headers already sent by (output started at /home7/eastasia/public_html/wp-content/plugins/wordpress-mobile-pack/plugins/wpmp_switcher/wpmp_switcher.php:76) in /home7/eastasia/public_html/wp-content/plugins/wordpress-mobile-pack/plugins/wpmp_switcher/wpmp_switcher.php on line 513 June 30th, 2010 Author: Ulrich Volz, German Development Institute Japan is again haunted by deflation. While the nation is following the beef bowl price wars between fast food restaurants on television, the prices of consumer goods are falling and households are tightening their purse strings. Concurrently, companies ... market research, surveys and trends


Quantitative easing
The markets have given their emphatic response to the banking bailouts put forward in the UK and US. Both rescue packages are flawed and will fail to stem the slide into not just recession, but possibly a global depression. These bailouts were aimed at the symptoms, rather than the cause. Money markets are frozen because nobody knows how far property prices will slide, or the scale of losses banks will suffer. Banks are deemed insufficiently capitalised for the same reason. The policy response of Western governments has, therefore, been back to front. If they solved the underlying problem – chronic property deflation on a ... industry trends, business articles and survey research
Quantitative easing: printing money like mad to ward off deflation ...
of late.  Basically, the U.S. Federal Reserve has lowered interest rates to near zero percent and the fear is that these cuts will not have enough effect on the willingness to lend in order to reflate the U.S. economy.  Therefore, the Fed has decided to take more draconian measures, one of which is Quantitative Easing, flooding the economy with money. This experiment is not without risks.  There is the potential for very high inflation down the line if the Fed is successful.   But, does the Fed have a choice?  It seems that it is looking at deflation or depression on the one hand or stagflation on the other.  Take your choice. ... industry trends, business articles and survey research
Gold Price Plummets 3.7%, Drops Below $1200
suffered its steep drop as liquidation in COMEX gold futures sparked a wave of selling in all investments tied to the gold price. The 3.7% fall in the gold price was its second largest decline this year, exceeded only by the $44.50, or 4.0% drop in the spot price of gold on February 4. With today’s slide in the gold price, the yellow metal cut its year-to-date gain to $101.86, or 9.3%. The sell-off in the gold price came as the euro currency surged 2.4% to 1.2523 against the U.S. dollar - its highest level since May 23. Despite its historical inverse correlation to the euro/ dollar currency cross, the gold price has ... market trends, news research and surveys resources
Banks, Analysts Warn of Massive Money Printing Ahead
As credit and economic activity continue to contract, analysts are warning of big problems and unprecedented fiat-money creation by the Federal Reserve System in the near future. “Get ready for the cliff-edge,” warned Royal Bank of Scotland credit chief Andrew Roberts in a note to clients late last week. He said “monster” quantitative monetary easing (money printing) is coming and that investors should “Be long gold. Think the unthinkable.” “We cannot stress enough how strongly we believe that a cliff-edge may be around the corner, for the global banking system (particularly in Europe), ... market trends, news research and surveys resources


Quantitative easing - Russell Research - Quantitative easing ...
Quantitative easing: should investors worry about deflation or inflation? ..... decade of sluggish growth and mild deflation in the 1990s. ... technology research, surveys study and trend statistics
Monetary Policy in Deflation: The Liquidity Trap in History and ...
Apr 14, 2010 ... strike against inflation at the Federal Reserve. ..... The quantitative easing pursued over the past two years has been associated ... technology research, surveys study and trend statistics
Thinking about the liquidity trap
We live in the Age of the Central Banker - an era in which Greenspan, Duisenberg, and Hayami are household words, in which monetary policy is generally believed to be so effective that it cannot safely be left in the hands of politicians who might use it to their advantage. Through much of the world, quasi-independent central banks are now entrusted with the job of steering economies between the rocks of inflation and the whirlpool of deflation. Their judgement is often questioned, but their power is not. It is therefore ironic as well as unnerving that precisely at this moment, when we have all become sort-of ...
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In times of a recession, what happens to inflation? - Yahoo! Answers
I'm just doing some economics homework and through all the tables i cant quite figure out the relationship between economic growth and inflation. any help appreciated =) Inflation will come down due to lack of spending in the economy. Inflation usually occurs when there is a large amount of spending in the economy, which leads to the gradual increase of prices of goods and services. In a recession, people don't spend much and tend to save more, so inflation comes down naturally. In other words, demand is less for goods and supply is in excess, so if you draw a supply-demand graph you will see the equilibrium ...
How can the Fed Destroy Money It Created? | Ask MetaFilter
[MonetaryPolicyFilter] In relation to the Fed's huge injection of money yesterday, please explain to me how, if at all, the Federal Reserve can destroy money on its balance sheet in a way that offsets the inflation that normally would result. The Fed's announcement yesterday that is it going to flood the economy with dollars would, in normal circumstances, be horrifically inflationary. But these are not normal normal circumstances. My questions are: 1) Why isn't this inflationary? To what extent have deflationary factors stemming from the credit crisis not yet worked their way into the economy such that they ...