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Can the Fed Stop Inflation?

Posted June 24, 2008

“Soaring inflation means the credibility of the legal tender in your wallet is being called into question. In other words, does your dollar really have any value?” — Jack Crooks

by Jack Crooks

Baltimore – (TFN): All over the world, everyone from market analysts to your average grocery shopper has been buzzing about inflation lately. You can’t blame them — necessities like basic food items have been soaring lately.

According to yesterday’s Reuters, “In rich and poor countries, fuel and food prices surges have sparked wave after wave of protests by truckers, taxi drivers, fishermen and farmers demanding government action, increasing fears of political instability and economic downturn.”

And it just seems to get worse with each passing day.

For those of us watching the markets and the Fed, each new day brings new evidence of inflation rearing its ugly head. Each new piece of data raises a new concern — whether the threat is revealed in India, the United States, Europe, or even on your monthly grocery bill.

Let’s face it. No one likes paying more for something this month than they did last month. But consumers are facing this inconvenience all over the world right now. And that’s where currencies come into play.

Currencies are the medium of exchange you use on a daily basis to purchase goods and services. We all depend on our purchasing power to hold its value. Soaring inflation means the credibility of the legal tender in your wallet is being called into question. In other words, does your dollar really have any value?

Today, I would like to address this issue of credibility as it relates to central banks, namely the U.S. Federal Reserve. But first, how do these soaring prices affect your currency’s value? Read on to learn more.

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Posted by Jack Crooks · Filed Under US Stocks and Markets 

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