In the recent article on the party in stocks, this was one of my concluding paragraphs:
The bottom line is that by the time the Fed becomes institutionally aware that inflation is raging across the globe – and I often wonder when they’ll finally awake to the threat – it will be too late. Inflation will have the momentum, and it will take a vast overreaction on the part of the Fed to restrain it. They’ll have to drain enormous amounts of liquidity and tolerate vastly higher interest rates to be able to do that, and I doubt they have the courage for such bold action. I think they will hesitate, equivocate, and ultimately be late.
Perhaps sensitive to the growing awareness of inflation across the world and the Fed’s role in fostering it, Bernanke took the opportunity today, while at the National Press Club, to minimize any such concerns. This is really quite a disturbing mindset on display:
Bernanke Shrugs Off Inflation Fears
FEBRUARY 3, 2011, 1:58 P.M. ET
Federal Reserve Chairman Ben Bernanke said Thursday the economic recovery should gain speed this year, but persistently high unemployment and low inflation call for continued support from the Fed.
Mr. Bernanke shrugged off a recent increase in commodity prices, saying overall inflation remains “quite low.” He also repeated his stern warning about the daunting fiscal challenges the U.S. faces, calling for a plan to be drawn up as soon as possible to cut budget deficits in the future.
Showing little concern for the recent surge in global energy and food prices, Mr. Bernanke said inflation was only 1.2% in December in the U.S. He noted that underlying inflation, which strips volatile food and energy items, was only 0.7% in 2010, compared with around 2.5% in 2007, before the recession began.
What else can be said? The Fed is sticking to its guns here and claiming that ‘core’ inflation, which strips out food and fuel, is only running at 0.7%. The chorus of people who are calling ‘BS’ on that particular statistic is growing by the day, reaching ever higher in the financial and social strata.
However, all one has to do is talk to someone who runs a business to discover that prices are simply not ‘flat’ or trending down.
by zoedog 
