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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Tenchusatsu who wrote (465539)	3/22/2009 1:43:17 PM
From: tejek	Read Replies (1) \| Respond to of 1573888

Ted, > Then you slowly raise the interest rate to reduce the flow of liquidity. Isn't that all part of the stagflationary cycle? Not necessarily. Stagflation is inflation with no growth usually due to some unforeseen or an unusual economic occurrence like the quick rise in oil prices in the 1970s. What the fed is doing now is flooding the economy with liquidity [cash], driving the value of the dollar down. That stimulates bank lending, investing in the stock market, and making American products cheaper to the world. In turn, that will encourage growth of the American economy. The danger is twofold......you are potentially inflating the bubble once again and we are still at peak oil. The price of oil will start to rise although now as dramatically as it did last year. Bernanke is taking a risk and must watch the economy very closely over the next two years.