Monday, May 9, 2011

Unemployment Rates Continuing to Rise

Thanks to the Federal Reserve and their recent purchase of 2.3 trillion dollars in mortgage and debt, more Americans will experience unemployment. The amount of money flowing through the economy will increase as a result of the increase in purchased bank reserves. This large amount of freely flowing money throughout the economy could easily lead to inflation. Inflation is when there is a general increase in prices but a fall in the purchasing value of money. Inflation tends to lead to more unemployment which is definitely not needed right now in the United States since our unemployment rate is at a frightening high of 8.8%. The predictions right now say that there will be a 2.2% rise in the unemployment rate. Other predictors are saying that this will create 3 million jobs by 2012, and by the end of June 2011 there will be 700,000 new jobs. The only way for this to successfully happen is if the Federal Reserve can make a clean exit from their previous record stimulus program. Surges in the money system always lead to higher prices because the value of a single dollar would decline. This then creates more unemployment since growth and good productions would be reduced. The hopes are that the unemployment rate will be trimmed down to 7.6% by the end of 2012. But the only way this could truly happen is if the Federal Reserve is smart about their decisions. So American citizens will just have to wait and hope that the future holds favorable economic conditions that could thus lower the unemployment rate. We will all just have to wait and see what happens with the Federal Reserve, which thus determines the future of 2012.

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