The Fed Must Strengthen the Dollar - Wall Street Journal- Topic: How Does Money Lending Interest Work
When Federal Reserve governors meet today, they should consider that solutions to their twin challenges – a flagging economy and systemic moral hazard in financial markets – have common roots in a stable dollar. Unfortunately, with total first quarter job losses up to 232,000 and the University of Michigan Consumer Sentiment Survey at its lowest level since 1982, fed funds futures indicate a strong likelihood of a cut of 25 basis points in the fed funds rate. MZM – equivalent to M2 minus time deposits, plus all money market funds – measures money or assets that can be quickly turned into money at par. By discarding the Phillips Curve blinders, the Fed would happily learn that economic growth and low inflation are not a mutually exclusive trade-off. Learn more
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