Why We Need a Goal of Zero Inflation - Essay Example

Only on StudentShare

Extract of sample
Why We Need a Goal of Zero Inflation

Keleher reports that, "This objective has been endorsed not only by many of the world's most esteemed monetary economists but also by many Federal Reserve officials". A zero inflation rate will not impact the unemployment rate as critics contend. It will, however, stabilize the economy, and benefit the average worker.
Though there is some debate about the definition of zero inflation, almost all economists agree that high inflation rates have a negative impact on the economy. When the inflation rate reaches double digits, economies will experience slower rates of growth. The unpredictable future of inflation rates reduces investment, spending, and creates a climate ripe for poor planning. Future prices and uncertainty about future income affects everything from automobiles to the real estate market. There is no doubt that a goal of zero inflation is desirable in today's instantaneous, global economy.
As much as it is desirable for the corporate economy, it is even more so for the individual. Retirees on fixed incomes face an uncertain future with high inflation. For the average worker, an inflationary rise in wages will lag the increase in prices, which will place them permanently behind the inflation curve. The complexities of evaluating personal financial decisions in an inflationary market leaves the consumer open to exploitation. ...
Download paper


Milton Fiedman once said that with the introduction of fiat currency, there was no longer any method of standardizing and stabilizing the price system, and no standard of value exists. It is incumbent upon the central bankers to provide that stability (Keleher)…
Author : ybartell

Related Essays

The Nature of Theory Why we need to be able to think in theoretical terms
Most of the time, people think within the box suggesting the idea that they tend to understand matters simply based upon the utilization of their sight and their hearing sense. It could be noticed though that simply thinking within this box limits the capability of people to see only what they can and not that of those that they could perceive.
6 pages (1506 words) Assignment
Inflation targeting
2% in the U.K. nd 2.5% in Nrwy. (Mishkin, Eakins, 2006) The difference between these frms des nt seem t mtter in prctice: centrl bnk with trget rnge seems t im fr the middle f the rnge, nd the edges f the rnge re nrmlly interpreted s "sft edges," in the sense tht they d nt trigger discrete plicy chnges nd being just utside the rnge is nt cnsidered much different frm being just inside.
7 pages (1757 words) Essay
Goal Seek and Solver
The miles per hour are constant, and Excel is goal seeking to determine the number of miles traveled.
4 pages (1004 words) Essay
Goal Setting
I have some very lofty goals that I know are challenging but I am on the right path. Currently I am working towards becoming a Clinical Physcologist. I am attending the University of Wisconsin-Madison as a freshman. I am highly ambitious as I will be completing 26 credits for my 1st semester (normally coursloads run from 15-20 credits). I have sustained a high level of achievement throughout all of my academic career, my many awards and honors include Honor roll (200-2006), Who's Who Among American High School Students, High School student achievement award (2004 and 2006), Student of the...
2 pages (502 words) Personal Statement
There have been cases around the globe known as hyperinflation. Though there is no official definition for it, it is generally accepted as a 50% annual inflation rate. Ecuador suffered through a 96% inflation rate in 2000 ("Background Note: Ecuador"). This was caused by a weak economy, massive debt from El Nino in 1998, and a floating currency. The president was ousted in Jan. 2000 and caused a 75% spike in a one-month period. The new government restructured the debt, privatized state owned industries, and tied the currency to the US dollar. The following years saw lower rates and it had...
2 pages (502 words) Essay
Should the central bank aim for zero inflation? (Economics)
rcent inflation rate would not be in line with the natural rate of unemployment in the country therefore targeting a zero percent inflation would not serve the interests of the economy.
3 pages (753 words) Essay
increasing reliability on the use of technology to estimate future plans, widespread awareness of the economic decision making processes, readily available literature on risk management in business and much advanced, organized and computerized methodologies to ensure solid business-monitoring, projects today are incurring heavy financial losses. And the situation is same throughout the world. If we draw an analysis of the trends of the past and present, it would apparently seem that the modern-world businessmen are far immature and less educated in business as compared to so called...
6 pages (1506 words) Essay
Got a tricky question? Receive an answer from students like you! Try us!