Reply to the following threads with at least 175 words per reply. Any sources cited must have been published within the last five years. Acceptable sources include the International section of any reputable website that focuses on international business, such as Wall Street Journal, Financial Times, or the Economist.
Inflation per Oxford (Links to an external site.) is “a general increase in prices and fall in the purchasing value of money.”
I am sure a lot of us have been hearing of the inflation rate as it has been very high and getting higher this year with inflation at 7.87% compared to around 1.68% a year ago. The large inflation jump is due to a lot of different things but one thing per Tayor Tepper (2022) was “Elevated inflation has been driven by supply chain disruptions and pent-up consumer demand for goods following the reopening of the economy in 2021. Should these issues resolve themselves, the Fed may not have as much work to do on the inflation front as some fear.” Minimizing inflation and maximizing employment is two of the very important jobs of the Federal Reserve. So, inflation is a priority for the Federal Reserve as they have moved up the end date of the quantitative bond in an attempt to help stop the upward climb of inflation. Unfortunately, it still looks like for the time being that inflation will be sticking around. Taylor also states that it is a little worrisome as the inflation rate is growing faster than the average worker’s wages thereby the typical worker has less buying power with each dollar. This can be a very worrying time for us but really there is not much we can do but leave it in God’s hands.
THREAD 2 (Myles):
The International Monetary Fund (IMF) is perhaps the most important international finance organization. The fund is composed of 190 member countries (IMF, 2022) or, roughly 98% of all recognized countries in the world today. “Because the fund has become an international institution influencing the international system as a great economic power, no country can ignore its direct effects, whether negative or positive, on its economy and policy” (Mahdi, 2020). The fund’s mission is to achieve sustainable growth for all members, encourage trade expansion, and discourage policies that prove harmful to prosperity; this is accomplished through the use of policy advice, financial assistance, and capacity development (IMF, 2022). The power of this fund can be utilized for good; however, it must prudently consider the implications of its policy and aid.
“To participate in an IMF lending arrangement, borrower countries must establish and agree to comply with a number of lending conditions” (Hackler et al., 2019). This can lead to both positive and negative implications. The positive implications include that of leading developing countries to institute political and financial policy that is favorable to its citizens. It can also lead to long-term economic improvements that ensure that the country is able to support itself monetarily and make a lasting impact on the international market. Negative implications include the IMF’s policy influence attached to their conditional loans. Nations are also more apt to commit poor economic policy if they are assured a bailout.
In conclusion, the IMF has a vast amount of economic and policy power. This power can be used positively and negatively. For this reason, it is important that the fund is monitored in order to ensure that it is using its finances according to its mission.