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by rhino369
3933 days ago
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>Most central banks dictate that there should be 2% inflation, which means the economy needs to grow 2% per year. That's not true. Inflation isn't directly tied to growth. The Fed attempts to make inflation 2% no matter what the economy grows. 2% growth might cause 2% inflation, but if there was 5% growth, the fed would reduce money supply to keep inflation around 3%. And during no growth, the fed could increase money supply to ensure inflation during recessions. And that is in fact what they did during the great recession. |
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