Bernanke: Oil Price Hikes an Inflation Risk

You think? Duh!!! It has looked like inflation for quite a while to me, but as long as you print money, you think you can tell us there is no inflation.

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Bernanke: Oil Price Hikes an Inflation Risk, But Unlikely to Be Long Term

Published March 01, 2011

| Associated Press


WASHINGTON -- Federal Reserve Chairman Ben Bernanke told Congress Tuesday that a prolonged rise in oil prices would pose a danger to the economy. But he said a more likely outcome is a temporary and modest increase in consumer prices -- not runaway inflation.

Bernanke, in prepared testimony to the Senate Banking Committee, expressed confidence that economic growth would increase this year. But he warned it won't be strong enough to quickly lower unemployment, now at 9 percent.

He also cited other risks to the economy, including rising prices for oil, gasoline, food and other commodities, and further weakness in home prices. All could prompt Americans to spend less.

Read more: http://www.foxnews.com/politics/2011/03/01/bernanke-oil-price-hikes-inflation-risk-unlikely-long-term/#ixzz1FNlGWgJz

What most people fail to realize at this point is that the majority of the rise in the cost of a barrel of crude that has taken place in the past year or so has more to do with the devaluation of our dollar that has occurred than the increased cost of producing the barrel of oil. When we intentionally devalue our currency, as we have done with such measures as QE1 and QE2, the result is that it takes more currency to purchase the same amount of goods, thus the rising cost of the barrel of oil. The intentional devaluation of the currency is, in essence, a tax upon those who lent us money in the hopes that the cost to repay them won't result in more value being returned to them than was originally received from them when the money was lent. All well and good, so long as the lender doesn't feel the tax is excessive. If/when that tipping point is reached to where they do feel the tax is excessive, then they will require something of value other than the currency for repayment of the loan such that they receive a greater value in return for lending rather than a smaller value, and then we are off to the races with hyper inflation where you can't spend money fast enough to receive the value a good or service is supposed to have after it has been earned or borrowed. A great situation to be in when it costs a couple hundred thousand to buy a loaf of bread and you owe a couple hundred thousand on the mortgage for your home, but not really all that desirable outside of that one example.

Realizing no one has a crystal ball, I'd still like to ask...where do you guys think we're going to be in regard to inflation in the next 90 days? End of the year?

I'm pretty skeptical and think it will come sooner than later, from the signs that I have been seeing. Actually, I am surprised that we haven't seen hyper inflation already. I will leave the prognosticating to the experts, but it is definitely getting to be alarming IMO.

I agree. This is getting scary.

I am a buyer for a manufacturer and have been an inflation denier for the past 2 years, the economy has been so bad I could pretty much name my prices to suppliers, but now I am seeing price increases across the board and fuel surcharges again.

I am predicting inflation will continue for at least six months, and this isn't only due to the weaker dollar, China and England are also seeing big price increases.