Fed to Scale Back….but When?

Monday, February 15th, 2010

Inflation is coming but everyone is anxious to know when.

The Federal Reserve pumped a lot of capital into the economy during the recent economic downturn in hopes of aiding bank lending and preventing bank failures.

The Fed increased its balance sheet from $850 billion to over $2 trillion. The financial world now is bracing for the backlash.

Saturating our financial market with such a large amount of extra capital has many dreading a dramatic period of inflation. The Fed now has to take actions that will curb these side effects while still maintaining the  stabilization and recovery that our economy has achieved so far.

Sources:
Puzzanghera, Jim “Bernanke says Federal Reserve will scale back stimulus policies….eventually” LA Times

http://articles.latimes.com/2010/feb/10/business/la-fi-fed-bernanke11-2010feb11

Chan, Sewell “Bernanke’s How-to on Rate Increase Lacks a When” New York Times

http://www.nytimes.com/2010/02/11/business/economy/11fed.html

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: