Are we heading for deflation or inflation? The Federal Reserve wants higher inflation, they use the method of quantative easing.

1. DEFLATION OR INFLATION?
REACTION OF THE FEDERAL RESERVE
Marie Peene

2. Overview
 Situation of the Investors
 Strategy of the Federal Reserve
 Current situation and the future expectations

3. Situation of the investors
 Torn between two extremes:
 Deflation
 A decline in the general price level
 Inflation
 An increase in the general price level

4. Situation of the investors
Deflation or inflation?
 Economists: Deflation risks > Inflation risks
 Analyzing the economy in Japan:
 Stagnation + years of falling prices
 Is Deflation that bad?
 “The sun still rises over Tokyo”

5. Situation of the investors
 Main problem:
 Difficult to jump quickly from one extreme to another
 Investors need to stay flexible

6. Strategy of the Federal Reserve
 The federal Reserve = ‘the Fed’
 Chairman = Ben Bernanke
 First concern deflation
 Now concerned about continuing low inflation

7. Strategy of the Federal Reserve
 Boost the economy:
 pumping money into the economy
 Quantitative easing
 Monetary policy to increase the supply of money
Higher inflation Quantitative easing

8. Current situation
 Optimistic
 Small recovery
 600 billion dollars
 Pushed the dollar lower
 Driven up the price of commodities
 Second round of quantitative easing

9. Conclusion
 A lot of efforts to help and boost the economy
 Still uncertainty about the future of the economy

10. Thank you for watching
Marie Peene