As shown in the article ‘In Defense of Ben Banoke’ by Allan S. Blinder, ignorance is not an excuse during hard economic times. The falters in economy require grounded policies and clear understanding of the government indulgences in financial expenditure. When the economy has so many jobless people and is spending overly too much, questions begin rising because the efforts of central bank in lowering of interests does not reduce the effects of joblessness. There are efforts for central bank working towards lowering of interests though the questions still lie behind their strategies. It is inadequate embarking on short-term interest reduction and printing of extra money, which provide for surplus to use in buying government securities. The ridiculous experiment underway is that of the fed lowering medium as well as long-term interest rates, this is to come through creation of reserves for purchasing long ranged government securities. Such a move requires inflation with concerns of such a move leading into deflation instead.
The efforts of the fed working towards inflation are a possibility of getting lower into inflation. Either inflation or deflation are undesirable and would be a sign of incompetency in the part of the fed. The fact that such moves may lead to adverse manipulations in currencies and that may have dire effects in foreign businesses. In an ideal world, such a move may cause a reduction in the exchange rates, though. That is not the effect in a real world, and the events would lead to a strain in international business without achieving the expected competitive advantage for the U.S. These are concerns, which the fed should consider in its plans for the adoption of the policy.
Article 2
In the article, High-Grade Debt is on the Rise by Patrick McGee, the issue of bonds issuing forms center stage. Investor companies issue an enormous amount of bonds though analysts still find that indulgence insufficient for the satiation of the investors. With the increase in selling of bonds, there still is the need for refinancing and repayment of debts. There is a projection for an increase in cash flow to investors following coupon payments and repayment of principal. Bonds are insufficient for the satisfaction of the current cash flow leaving investors unsatisfied from corporate bonds availability. Those in need of bonds keep rising and there are no possibilities for the fall of that demand. However, there are restrictions of the market growth because of refinancing leading to the lowest expansion experience since 2007. Investors anticipate rise in bond interests and may opt to sell their bonds for attainment of better returns. At the same time, companies are looking for every opportunity for refinancing debts.
The economic state in the U.S. is becoming increasingly worrying though there are reports of the possibility of recovery. The warnings by investors regarding the situation is what has led to the scenario where investors sell their investment grade bonds anticipating an increase in interest rates, this is so because low rates render the bonds invaluable while every investor looks for a means of improving their economic worth. The efforts of companies refinancing of debts is the major issue in the reduction of investor bonds. This comes because investors look for every opportunity through, which they can reduce liabilities and that weighs hard on investors ho keep looking for inventing opportunities.
