Just as the Fed did early in the previous decade, Fed Chairman Ben Bernanke is artificially keeping interest rates too low for too long, which could be baking hyper-inflation into the monetary cake while weakening the currency so much that numerous sources are predicting the dollar soon will no longer be the world's "reserve" currency. If, as Milton Friedman said, "inflation is always and everywhere a monetary phenomenon," then we're in for trouble. In the year from January 2010 to January 2011, the M-1 grew by 10.3 percent and M-2 by 4.3 percent. The pace is increasing. In the three months since October, M-1 grew at annual rate of a whopping 15.6 percent.
Price hikes are occurring too. These aren't all because of monetary policy: Ethanol mandates are driving up food prices as well, and political turmoil in the Mideast combined with President Obama's multitudinous efforts to stop domestic fossil-fuel production are aiding the price hikes in oil and gasoline. But the fact remains that only a weak housing market -- housing costs are weighted to count as more than a third of the Consumer Price Index -- is keeping the official measure of inflation as low as it is.
Part of the reason for the current high unemployment is the scarcity of money or credit, if Bernanke raises interest rates right now, this will only worsen. While I am not opposed to interest rates rising to their natural levels, there will be consequences.
I still blame Greenspan's cheap money as part of the reason for the housing bubble.
Thomas Sowell: There are no solutions, just trade-offs.
outdoor338 wrote: Fed Chairman Ben Bernanke is artificially keeping interest rates too low for too long, which could be baking hyper-inflation into the monetary cake
Finally "MacArthur Park" makes sense.
"Someone left the cake out in the rain/I don't think that I can take it/'Cause it took so long to bake it/And I'll never have that recipe again",
