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In a market economy a major service that money provides is that of the medium of exchange. Producers exchange their goods for money and then exchange money for other goods. As production of goods and services increase this results in a greater demand for the services of the medium of exchange (the service that money provides). Conversely, as

Most experts are of the view that the massive monetary pumping by the US central bank during the 2008 financial crisis saved the US and the world from another Great Depression. On this the Federal Reserve Chairman at the time Ben Bernanke is considered the man that saved the world. Bernanke in turn attributes his actions to the writings of

Currency rates of exchange appear to be moving in response to so many factors that it makes it almost impossible to ascertain where the rate of exchange is likely to be headed.  Rather than paying attention to the multitude of variables, it is more sensible to focus on the essential variable. As far as currency rate of exchange determination is

The yearly growth rate of the US consumer price index (CPI) fell to 0 percent in September 2015, from 0.2 percent in August and, 1.7 percent in September last year. The yearly growth rate of the European Monetary Union CPI fell to minus 0.1 percent in September from 0.1 percent in the previous month and 0.3 percent in September last year. Also,

US real gross domestic product (GDP) grew faster than initially thought in Q2. GDP expanded at a 3.7 percent annual rate during the second quarter, instead of the 2.3 percent rate reported for the quarter last month. The annual change for the first quarter was also revised up to 0.6 percent for Q1. Most experts, in response to these figures, are

Earlier this month, the Chinese government decided to depreciate its currency on three consecutive occasions. On August 13, the price of the US dollar was trading at 6.413 — an increase of 3.3 percent against July. The key factor behind the central bank’s lowering of the yuan is a sharp decline in the growth momentum of exports with the yearly

The Mainstream View of Money Velocity According to popular thinking the idea of velocity is straightforward.  It is held that over any interval of time, such as a year, a given amount of money can be used again and again to finance people’s purchases of goods and services. The money one person spends for goods and services at any given moment can

According to mainstream thinking, the central bank is the key factor in determining interest rates. By setting short-term interest rates the central bank, it is argued, through expectations about the future course of its interest rate policy influences the entire interest rate structure. (According to expectations theory (ET), the long-term rate

President Donald Trump proposed last month a tax plan that would lower the top individual tax rate to 35% from 39.6%. It would also lower the corporate income tax rate to 20% from 35%. The plan however, says nothing about how spending will be cut to avoid increasing deficits. According to supply-side economics — a relatively new school of

On October 4 2017, the former governor of the Federal Reserve Daniel Tarullo in a speech at the Brookings think-tank in Washington said Fed policy makers do not have a reliable theory of what drives inflation. According to Tarullo, central bankers should pay less attention to theoretical models and more to actual data. However, how is it possible