Sublime

monetary policy castle is most directly in charge of two other castles: inflation (defined as a rise in prices that creates a decrease in purchasing power, something we are all familiar with) and the labor market (where we find critically important metrics such as the labor force participation rate, the quits rate, the unemployment rate, and more).

In March 1933 the nation’s financial structure was in chaos and disarray. Roosevelt kept his head, quietly took charge, and gave marching orders to his subordinates. “This Nation asks for action, and action now,” he said, and he was as good as his word.1

Central banks are tasked with managing the money supply, which in turn should affect their currency’s value and inflation. To expand the money supply, most advanced countries buy their own bonds and give the seller currency, and to reduce the money supply, they sell their bonds and pull currency out of circulation. Interest rates can also be