Interest rates play a key role in today’s modern economy and monetary policy. The Federal Reserve can make changes to key interest rates and interest rate expectations and control the flow of capital into the economy. In other words, by maintaining low interest rates, capital is easier to acquire. This ease of acquiring capital can fuel economic growth as more money available translates into more potential spending. If too much capital becomes available, however, a situation may arise in which there is” too much money chasing too few goods.” This can lead to inflation due to the fact that as more capital looks to acquire fewer goods and services, those providers of goods and services can charge more money, hence rising prices.
There is a common misconpception that interest rates and precious metals are inversely correlated. Though this may certainly be the case at times, here we will outline the relationship between the two, and how an inverse correlation may not always be the case.read more
In recent years, there has been seemingly more and more debate about the feasibility of returning to the gold standard. As concerns over the U.S. dollar mount, there may be further talk of such ideas, although whether or not they make sense and could be actually implemented is highly debatable.read more
Quantitative easing, affectionately referred to as “QE”, is a term that has been widely used in recent years. In fact, more people are likely familiar with this phrase than ever before. Given its coverage in the media, and its widespread use, we felt it prudent to provide a simple explanation of what QE is and how it can affect financial markets.read more
The term inflation refers to a sustained increase in the price of goods and services. In other words, things are getting more expensive. As goods and services get more expensive, a unit of currency will not buy as much of them. For example, as gasoline prices go up, every dollar buys less gas. As the price of a loaf of bread rises, every dollar buys less bread.read more