MONEY AND INFLATION
* Special thanks to "Google Images", "wikipedia.com", "CNBC",
Patrick Barron and"BloombergBussinessweek"
Greenspan's tenure at the Fed in many ways was highly successful guiding the country and the Dollar through recessions and prosperous and this is exactly what the Chairman's job is. He must keep his eye on our Dollars and make sure they are a credible world currency.
However, "inflation" may also be used to describe a rising price level within a narrower set of assets, goods or services within the economy, such as commodities (including food, fuel, metals), tangible assets (such as real estate), financial assets (such as stocks, bonds), services (such as entertainment and health care), or labor. The Reuters-CRB Index (CCI), the Producer Price Index, and Employment Cost Index (ECI) are examples of narrow price indices used to measure price inflation in particular sectors of the economy. Core inflation is a measure of inflation for a subset of consumer prices that excludes food and energy prices, which rise and fall more than other prices in the short term. The Federal Reserve Board pays particular attention to the core inflation rate to get a better estimate of long-term future inflation trends overall.
1789 - 1795
Here is a Wikipedia article explaining the history of this event along with a brief article describing “Petrodollars”. Understanding this event is probably the most important information of this article! Once we have a clear understanding of the foundation for which the United States Dollar is based upon then we are able to asses our currency a little better. It would seem dollars are based upon this simple formula: US GDP + World Oil Prices = Price of US Dollars and this is divided by the total number of Dollars in circulation!
Lets turn our attention now to what we could expect in the Fed printed more Dollars to pay down the deficit. A weaker Dollar - a Dollar worth less than the value of the currencies for the worlds other industrial nations could signal the begging for more and newer industry in the United States. More jobs. We've just painted a scenario which probably could never happen because no matter what, the other industrialized nations will always keep their currencies under the value of the US Dollar. Interesting stuff to think about!