Money and inflation

A timely article relating the growth rate of the money supply to the rate of inflation, just like we have been discussing in class. There are some nuances regarding Prof. Hanke's argument as he is not addressing Reserve Balances of commercial banks, but, in general, his story does explain at least a portion of the inflation rate.

Treasury Yields Surge as Global Central Banks Scramble to Respond to Fed, Inflation

 I read the article "Treasury Yields Surge as Global Central Banks Scramble to Respond to Fed, Inflation", by Megumi Fujikawa. This article describes how the U.S government bonds yields have surged up to raise interest rates in banks. This is to help the local currencies that have been pressured by the dollar's strength. They remained stable since Thursday after the Fed raised short term rates by .75 points. Central banks are trying to one up another by raising their rates and other aggressive actions to get an upperhand. Jim Caron who is the senior portfolio manager and chief strategist of global fixed income at Morgan Stanley Investment Management. Investors, he said, are thinking, “I thought I knew where they were going, but now the sky’s the limit, and that’s where you get into this freefall type of mentality.” One may ask why is this important? It is important because as Fujikawa says, “U.S. Treasury yields play a critical role in the global economy, setting a floor on borrowing costs for U.S. consumers and business and establishing a benchmark forward-looking return against which other assets are measured.” With this people will be able to judge how their personal assets will be measured on a return of if they were to sell them and how much they are valued at.

 Since you are working on your newsletters and have been following various economic indicators, here is a very appropriate episode that combines economic indicators and music....if you have any spare time: