Jun 25 Will the Actions of the Fed and Treasury Keep Asset Prices Artificially High? Question: It seems to me like the Fed and the Treasury are trying very hard to keep asset prices high. The Fed has vastly increased the money supply, partly by lowering interest rates to zero, and partially through quantitative easing. Continue reading
Jun 23 What’s the Relationship Between Inflation and Interest Rates? Question: I am confused about the cause/effect relationship between inflation and interest rates. Many economic talking heads claim that interest rates will rise if present monetary policy produces inflation. But the principle of supply and demand suggests that if… Continue reading
Jun 16 Why Doesn’t the Government Simply Give Households Lots of Money to Stimulate the Economy? Question: One of the most popular suggestions I’ve heard for stimulating the economy is the federal government should give every household one or two million dollars. Would that work or would it create hyperinflation? Paul Solman: Let’s not be profligate… Continue reading
May 29 What Led to the High Interest Rates of the 1980s? Question: What were the causes and circumstances that led to the high interest rates in the 80’s? Was it inability to effect a change or inaction in addressing the issue? Paul Solman: If by “interest rates” you mean the rate… Continue reading
Apr 15 Can We Prepare for Inflation? Editor’s Note: The government reported Wednesday that consumer prices fell in March, indicating a weakened demand for goods and services. But while this price drop raises the specter of deflation, many economists contend that the real risk to… Continue reading
Apr 15 Consumer Prices Fall in March on Energy Costs By Admin, PBS News Hour Consumer prices fell in March, the government reported Wednesday, indicating that weakened demand for goods and services during the economic downturn has kept a damper on energy and food costs. Continue reading
Apr 08 As the Amount of Money in Circulation Increases Rapidly, How Does the Fed Prevent Hyperinflation? By Business Desk Question: If the Fed and Treasury have increased the amount of money in circulation by $1.6 trillion in an effort to stave off deflation in the near term, how does the Fed take this money back out of circulation to… Continue reading
Apr 07 Why Is Deflation Bad? Question: Why is deflation so bad? I have certainly benefited from the drop in gas prices, so I wonder what is wrong with things becoming cheaper in general? And wouldn’t that make up for previous inflation? Paul Solman: Another good… Continue reading
Mar 31 Watch G20 Leaders to Tout Competing Ideas on Recovery Some European leaders are at odds with President Obama's economic agenda, which encourages more stimulus spending. Analysts assess the challenges at this week's G20 summit. Continue watching
Mar 27 Was Depression-Era Debt as High as It Is Now? Question: When we hear comparisons between today’s economy and that of the Great Depression, I wonder: Had as many people and institutions been as highly leveraged then as now? Were personal and institutional debt as high then as they are… Continue reading