Economics 101: Supply & Demand

If there is not enough apples to meet the demand of the consumer the price or value of the apple goes up. If the supply of apples are greater than the demand the price or value goes down. Simple basic economics right? Same thing applies to the American dollar. If the supply of the dollar (more available in the system) the price or value goes down.

On November 3, 2010 the Federal Reserve headed up by Ben Bernanke announced that it will buy $600 billion of our own treasury bonds to "stimulate" the economy. Basically what this means is that the Fed in printing $600 billion to buy our own (America's) debt. This influx of available cash will cause the value of the dollar to go down. When this happens my hard earned money buys less than what it did before because of inflation...especially in commodities...expect prices to soar!

Businessweek.com published this article showing how this happening: Dollar Drops Most in Four Weeks as Federal Reserve to Buy Bonds

Please take a few minutes and read this article. It is very informative. Glenn Beck: Devaluing the Dollar


ely said...

Perfect for us, hooray for the Euro!!!! Just kidding!!

Evan said...

Yah, for now...unitl the Euro collapses, which at the rate it is going should be sometime soon.

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