Gold Price In Usa
RE: Economy: Can someone explain how, when the federal government. (USA) reduces the interest rate for banks
How that inflation has on the rest of our economy? Our U.S. dollar is weaker now, and the price of gold has increased, our dollar is not More backed by gold. So how does this work? Thanks for the answers!
Well that's too much to ask a single question. However, there are some basic concepts that help explain most of what you ask. First, the Federal Government itself does not interest rates not lower. That is the Federal Reserve headquarters. If the Fed lowers rates, effectively increases the money supply. Banks are more willing to lend because they can get the money you are giving cheaper. Money, like everything else is still the basic law of supply and demand. This is how things become more abundant (with everything else unchanged) that are made cheaper (worth less) So, if there are more dollars in circulation, the euro and other currencies will be a little more expensive. Gold, oil and other currencies have value. So if there are more dollars around and nothing changes it will take more dollars to buy any of the other. The above is a response too simplistic for the real questions you're asking. Your question is what is often explored in a class from macroeconomics. Check great articles on Wikipedia for details.
(2006) Ron Paul: GOLD AND THE US DOLLAR [Part 1]
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