Created in 1913 with the enactment of the Federal Reserve Act, the Federal Reserve (the Fed) is the central banking system of the U.S. The Fed functions as the bank of the U.S. government, overseeing the nation’s financial institutions. As the central bank, the Fed safeguards and manages the U.S. economy and its money supply with its economic and monetary policies, which makes it a very powerful global player. Ben Bernanke is the current chairman of the Federal Reserve.
The value of the U.S. dollar is anchored in trust. As a fiat currency, the U.S. dollar isn’t linked to any physical reserves, like gold or silver; it’s just paper. For the U.S. dollar to be worth anything, it has to be backed by an economy people have faith in. Otherwise, the U.S. dollar would collapse.
Regardless of its intentions, t… Read More
The amount of money investors are borrowing to buy stocks is skyrocketing.
In September of this year, margin debt on the New York Stock Exchange (NYSE) stood at $483.87 billion—a new record-high. When the stock market was forming a top in 2007, margin debt was at a “then” record-high of $329.51 billion. Margin debt on the NYSE is … Read More
Ask even an amateur economist, and they will tell you this: an increasing money supply eventually leads to inflation. It’s a simple concept; the more paper money there is in the system, the less it’s worth and the less it buys.
And this is exactly what is happening in the U.S. economy. The money supply is growing at a fast rate when com… Read More
It’s finally over…
The quantitative easing programs initially started by the Federal Reserve six years ago are (for now) history.
In its statement on October 29, the Federal Reserve said, “Accordingly, the Committee decided to conclude its asset purchase program this month.” (Source: “FOMC Statement,” Federal Res… Read More