Increasing the money supply

Increasing the money supply could induce inflation and it could get out of control. The analogy is that the fed has the gas and brakes of the economy and the economy is a huge ship that is hard to get going and hard to stop. The gas is lowering interest rates and increasing the money supply and the breaks are the opposite. Right now the Fed sees us moving too slow and therefore is putting the pedal to the metal. But the ship could build a full head of steam, economy overheat, in a short amount of time once it gets moving. Then they would have to hit the brakes before we run into an iceberg!

No icebergs in sight so few worries just yet. Hopefully, the fed won’t leave the bridge in the middle of the night when things get going.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s