How The Average U.S. Consumer Spends Their Paycheck

Re:How The Average U.S. Consumer Spends Their Paycheck by nazgulnarsil on Monday July 13, 2009 @08:15AM (#701533)

um...the federal reserve directly controls the interest rate paid by banks, which affects how much money is injected into the system. via the money multiplier new money disseminates out into the economy, causing inflation.

how is it not government?

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Re:How The Average U.S. Consumer Spends Their Paycheck by jusob on Monday July 13, 2009 @06:05PM (#702597)

The federal reserve does not control the price of oil for example. Controlling inflation is one of its function. Again: controlling it, not setting the inflation rate. For example, there are/were fear of deflation when the inventory was high, and the demand low. With a interest rate set at pretty much 0%, there is not much else the reserve bank can do.

So I stand by my statement, the government does not "inflate the prices by 3-5%" a year.

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Re:How The Average U.S. Consumer Spends Their Paycheck by nazgulnarsil on Monday July 13, 2009 @07:43PM (#702754)

interest set to 0% certainly is inflationary since that means real interest is negative. government doesn't control the prices of commodities directly, but if the money supply was kept static you'd get continual mild deflation.

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