Tag: Monetary policy

Don't Get Ruined by These 10 Popular Investment Myths (Part IX)

Posted on by The INO.com Team

Interest rates, oil prices, earnings, GDP, wars, peace, terrorism, inflation, monetary policy, etc. -- NONE have a reliable effect on the stock market

By Elliott Wave International

You may remember that after the 2008-2009 crash, many called into question traditional economic models. Why did they fail?

And more importantly, will they warn us of a new approaching doomsday, should there be one?

This series gives you a well-researched answer. Here is Part IX; come back soon for Part X.

Myth #9: Inflation makes gold and silver go up.

By Robert Prechter (excerpted from the monthly Elliott Wave Theorist; published since 1979)

This one seems like a no-brainer. The government or the central bank prints more bonds, notes and bills, and prices for things go up in response. Gold is real money, so it must fluctuate along with the inflation rate.

Once again, it doesn't happen that way. Let's examine the history of inflation and the precious metals since the low of the Great Depression.

Inflation occurred relentlessly from 1933 to 1970, yet gold and silver remained unchanged over the entire time. True, the government fixed the price. But markets are more powerful than any government, and if the market had wanted precious metals prices higher, it would have made them go higher. Continue reading "Don't Get Ruined by These 10 Popular Investment Myths (Part IX)" →

Don't Get Ruined by These 10 Popular Investment Myths (Part II)

Posted on by The INO.com Team

Interest rates, oil prices, earnings, GDP, wars, terrorist attacks, inflation, monetary policy, etc. -- NONE have a reliable effect on the stock market

By: Elliott Wave International

You may remember that during the 2008-2009 financial crisis, many called into question traditional economic models. Why did the traditional financial models fail?

And more importantly, will they warn us of a new approaching doomsday, should there be one?

That's a crucial question to your financial well-being. This series gives you a well-researched answer.

Here is Part II; come back soon for Part III. Continue reading "Don't Get Ruined by These 10 Popular Investment Myths (Part II)" →

Trading Using Monetary Policy Analysis

Posted on by The INO.com Team

Monetary policy, which is also known as interest rate policy, describes the actions or in-actions of a country’s central banks.  Interest rate policy generally focuses on maximizing price stability and growth.  The central bank of a country is considered the institution that controls a countries currency, money supply, and interest rates. Central banks also usually oversee the commercial banking system of their respective countries.

Each central bank has guidelines that are mandated by their legislature.  For example, in the US, the central bank has a dual mandate which is to maximize price stability and employment.  Other central banks, such as the European Central bank, have only one mandate which is price stability.

Central banks often spur growth and employment by reducing interest rates, making it easing for banks to lend money at reduced rates.  Lower interest rates also increase liquidity, and make purchasing riskier assets a more attractive alternative than holding low interest baring government notes. Continue reading "Trading Using Monetary Policy Analysis" →