Continued economics: Increasing monetary supply (known as stimulus, or printing of money though this term is not really relevant any longer as it is commonly digitized today) beyond the growth of GDP (gross domestic product, a term which represents the value produced by a nations economy, commonly referred to as an annual figure), initiates inflation and reduces interest rates over the short term. As demand reconciles the increase in supply over the long term, interest rates rise....or they should, if the Fed (federal reserve) didnt hold the interest at an artificially low rate in an attempt to increase demand to catch up to the excessive supply created by the last stimulus package. Prices commonly dont respond to the inflation created by excessive monetary supply for 12-18 months historically, so price increases in products that you see today were actually affected more than a year previous. Remember, the increases in prices arent due to the fact that the product actually costs more, the dollar in your wallet had become worth less, so it takes more of those dollars to trade for the product, seen as an increase in its price.
Posted on: Mon, 03 Feb 2014 18:41:58 +0000
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