10/10/2005

Inflation 101

Hello!

Many of the candidates for Mr. Greenspan's job as head of the Federal Reserve, from which he will retire in January, delivered speeches around the country extolling the horror of runaway inflation and how they would continue raising interest rates in order to curtail the blight. This apparently helped cause massive gyrations in the markets last week.

Getting back to basic economics, inflation is, in a nutshell, too much money -- chasing -- too few goods. The Federal Reserve has the ability to limit the amount of money by raising interest rates. However, The Fed does not have control over consumer spending (aka chasing) and the Fed does not have control over the quantity of goods.

Terri will be studying at Wharton School Business next week, studying and testing for her Certified Investment Management Analyst (CIMA) designation. Ray will be in the office providing full service to all of our investors.

Terri G. Millson, CIMC President

Ray Dicius, CSA, GEPC LPL Branch Manager