Western Financial Bank Irvine

Posted on January 20, 2012 by Admin
Western Financial Bank Irvine

Western Financial Bank Irvine

Some economists particularly monetarists; those who subscribe to Milton Friedman’s school of thought argue that through use of money supply central banks should have the ability to control inflation. This was true during Friedman’s time and this was also true before the emergence of the BRIC countries (Brazil, Russia, India and China) as economic powerhouses.

The emergence of the BRIC countries has changed the rules of economics because it is these countries that are driving both demand and prices and therefore the direction of travel of price movements. The BRIC countries influence whether prices go southwards or northwards.

The emergence of BRIC countries

The great con in the years between 2000 and 2010 was that central banks had tools and abilities to control inflation. Actually the truth is lower inflation was being manufactured in China and India as they were exporting lower prices to the western countries. The BRIC countries being the manufacturers of the world had low costs of producing and this translated into lower prices in the western countries they exported to.