So Why Is the Forex Philippiness Obleak for Americans Right Now?
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The central bank in the USA has been “printing money.” This increases the supply of money. You know, I like the idea of more money. So why does increasing the supply of money have negative consequences? It causes inflation.
For example, when the economy faltered during the Bush administration Bush used tax rebates to put more money in the hands of Americans. It seemed to have a positive impact. Of course, it also increased the US budget deficit. This kind of thing also causes prices to rise. When prices rises in the USA it negatively effects the dollar with the forex Philippines.
Why does increasing the money supply cause prices to rise? Lets take a look at a simple way of looking at it. The government sends out dollars to Americans. Most of this money will be spent. So now, you can go to Wal-mart and get that Guitar Hero you have been wanting. The problem is, so can everyone else.
So Wal-mart cant keep them in stock and they loose sales. To counter that, they will raise prices. They make fewer sales but they have more money and they dont run out of stock so they can sell more of the item.
At times, the government needs to stimulate spending and the way they can do that is by increasing the supply of money which lowers the forex Philippines for that currency.
Right now, the Fed is printing money by buying back its own bonds. This puts more money into circulation. More money means a power forex Philippines for expats living in the Philippines. It also lowers the benefit of Filipino working in the USA.
So this cant go on forever. Truthfully, the President doesnt get the blame nor the credit for such a move. The Federal Reserve Bank of the US was purposely setup to be independent of politicians. They dont have direct control over the actions of the Fed. Politicians do have influence over the Fed.
The amount spent on TARP and the stimulus package have already the Presidents hands tied. The US cant afford to throw federal spending at the problem because of the large deficit.
The Fed is expected to reverse its trend of creating money by the end of 2011. While I think it is the right move, I sure am not happy what it is doing to me personally. As the forex Philippines is moving in an unfavorable way for Americans.
While the Fed is taking measures to increase the money supply to stimulate spending the dollar will likely be weak in the forex Philippines.