ECN221_Dowell_Week2_Assignment.docx

Having the circumstances arising after the inflation

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Having the circumstances arising after the inflation comes with creativity to help stave off the money erosion. Fortunately, for those who have been dealing with the unstable finances for a long time have found rather clever ways to help keep their monetary values from dropping. One of the ways posted by William Baldwin in 2011 for Forbes, “Are you (a) in good health and (b) financially comfortable? If so, then it may make sense for you to delay starting your Social Security payments. By doing so, you earn a fatter monthly check, and this check is inflation- protected.” There are also measures/tools put in place by the United States government to help with the inflation; Firstly, interest rates through the central bank which is Federal Reserve. The Fed Funds Rate which is something that banks borrow money from the government to lend at some higher rates to be able to make money. When the Federal Reserve increases its interest rate, the banks have no choice but to increase theirs as well. Second, reserve requirements being increased on the number of money banks are legally required to keep on hand to cover withdrawals. The more money banks are required to put in reserve, the less they can lend to consumers. This helps decrease the spending. Lastly, reducing the money supply directly or indirectly by enabling policies that puts importance on reducing the money supply. (Kramer, 2018).
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