A few months back, Ben Bernanke and the Fed decided to print $600B or so to buy Treasuries because inflation was too low. I'm rather of the opinion that he did it because he knew there wasn't another $600B of demand for US debt and rather than try to curtail Obama's failed Keynesian spending binge, he opted to provide a printed money bailout of the government. Whatever the real reason, he did it.
Meanwhile, the revolutionary conflagration sweeping the Middle East has oil at or above $100 a barrel. Both of these events, printing money and an unstable source of petroleum, are inherently inflationary.
Yikes?
A quibble*: I don't think the printing and price of oil are independent variables.
ReplyDeleteBTW, Bernanke never said he was going to stop at 600. If you carefully parse the fed communications, QE2 is entirely open-ended.
* I hope you don't tire of my quibbling.
Your quibbling is always welcome!
ReplyDeleteDespite the Quibble, which I happen to agree with, I also feel a "Yikes" moment coming.
ReplyDelete