- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
re: The Time Table for the Dollar
Posted on 12/3/12 at 5:52 pm to WikiTiger
Posted on 12/3/12 at 5:52 pm to WikiTiger
quote:
What if they just prefer to allows markets to operate freely?
If markets operate freely they will mean revert but the volatility would be much higher. For example, if you didn't have inflationary controls price levels would rise uninhibited and banks would be laggards in raising interest rates. Eventually your exports would plummet and labor would be laid off in mass. Price levels would plummet and exports would eventually rise, the problem is capacity would be shaved too highly because of the dramatic swing. These dramatic swings damage confidence which damages the economy and the entrepreneurial spirit.
The only difference between a free market economy and a free market economy with a central bank is the latter smooths out the swings both ways, which in turn actually allows the economy to grow more by mathematical compounding (an asset that goes up 6% then down 4% is worth more than an asset that goes up 60% and down 40%).
quote:
Why?
See the above. A developed economy has a massive amount of resources and labor involved, and volatility in these situations leaves a lot of uncertainty for the livelihoods of a lot of people. The market will correct itself but a smoothing mechanism can be very valuable if used correctly.
Posted on 12/3/12 at 5:57 pm to BennyAndTheInkJets
quote:
if you didn't have inflationary controls price levels would rise uninhibited and banks would be laggards in raising interest rates. Eventually your exports would plummet and labor would be laid off in mass. Price levels would plummet and exports would eventually rise, the problem is capacity would be shaved too highly because of the dramatic swing.
Wouldn't some sort of equilibrium eventually be reached?
Popular
Back to top
Follow TigerDroppings for LSU Football News