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European Central Bank Policy Coming to America?
Pinnacle Digest writes: In his latest article Axel Merk breaks down virtually all possible scenarios for a QE3 and what strategies may be implemented by Ben Bernanke. He explains why a European Central Bank policy may be implemented in the US.
It’s no secret that Bernanke takes proactive steps in preventing deflation. During his infamous speech in 2002, Bernanke laid out his philosophy behind preventing deflation and the powers the Fed has. Bernanke also addresses the need for the Fed to be aggressive and proactive in preventing such a scenario.
An excerpt from Bernanke’s 2002 speech:
“Deflation is in almost all cases a side effect of a collapse of aggregate demand….The best way to get out of trouble is not to get into it in the first place…The Fed should try to preserve a buffer zone: …central banks … set … inflation targets … between 1 and 3 percent, … reducing the risk that a large … drop in aggregate demand will drive the economy far … into deflationary territory”
As Axel Merk explains, deflation is always reversible under a fiat money system. It simply comes down to what strategy is used to reverse it and what consequence that will have on different industries.
Axel Merk lays out all likely options the Fed will take in boosting economic growth. He even suggests a US styled LTRO as a viable option for the Fed.
Click here to read Axel Merk’s insightful article.