High Inflation reduces the middle Americans%26#039; paychecks by making the pricing of their necessities outpace their income. The Fed, today, 12/11/07, refused to lower the overnight rate by 1/4%. They will not admit it, but such a move would make the value of our new %26#039;paper%26#039; (bonds, treasury notes) issuances even more suspect in a world where the value of the Dollar is in a six-month swoon.
At the heart of our inflation threat is our $9 trillion debt to our own citizens as well as to other nations. We are getting closer and closer to the profile of the recent collapse of Argentina%26#039;s economy, when that government confiscated all bank accounts in the nation.
Nearly 90 years ago, in Germany, citizens after WW1, bought a loaf of bread with a wheel-barrow load of virtually worthless Marks.
High unemployment will FOLLOW high inflation, but it is our D.C. government%26#039;s responsibility to maintain the value of our nation%26#039;s currency. The endless war in Iraq has become an activity that we should never have initiated as it is quite clear that our economy is being stretched to the breaking point.
Which, is more problematic for the economy/society: high unemployment or high rates of inflation, y?
Unemployment eats at the soul. Inflation eats at the pocket book.
Which, is more problematic for the economy/society: high unemployment or high rates of inflation, y? loan
They are both very problematic, which is why Supply Side Economics is so useful.....if you can increase the aggregate supply, unemployment and inflation will both decrease (picture and AD/AS curve).
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