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| Home > News > Financial and Economic News > Former Fed leader says security purchases may cause future inflation |
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| Former Fed leader says security purchases may cause future inflation |
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| 11/2/2010
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The central banking system of the U.S. is considering purchasing at least $500 billion in long-term securities in an effort to boost the economy and create jobs, Bloomberg News reports. A former leader of the Federal Reserve warned that the purchase, also known as quantitative easing, may spark inflation in the future.
The news provider reports that former Federal Reserve Chairman Paul Volcker, who is an adviser to President Barack Obama, said that "when money is too easy for too long, we will have more" asset bubbles. Although he said the measure raises concern about inflation, Volcker said the U.S. unemployment rate has little chance of improving soon and the country's economic struggles can't be solved in the short term.
The Commerce Department recently revealed that the U.S. economy grew at at 2 percent annual rate in the third quarter of 2010. Policymakers said that a 2.5 to 2.8 percent range of growth is required to keep the jobless rate stable, according to the news provider.
Economist Ryan Sweet told Investor's Business Daily that he expects the Fed to buy $500 billion in assets and ultimately expand the purchase to $1 trillion by next year. |
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