Reserved as one of the most powerful forces in the financial markets, inflation can send the economy into a tailspin. This is one of the reasons why it is so important to policymakers and why the Federal Reserve can be a determining factor in inflation. The Fed influences how much money is in the economy and the cost of borrowing. Recently we have witnessed what rapid and out of control inflation can do to a country when Venezuela entered into a period of hyperinflation. Inflation in Venezuela rose more than 1,000,000%* in 2018 and put the country in turmoil. Currently, there are some in our federal government who believe the U.S. economy has enjoyed very low inflation for too long. What happens when an economy enjoys long periods of historically low inflation? The Wall Street Journal explains why low inflation is currently haunting The Fed.
*According to The International Monetary Fund
- In the news