Thread: Quantitative Easing causing inflation ?

not according to Ben Bernake

Fed chief Ben Bernanke denies US policy behind record global food prices

Ben Bernanke, the chairman of the US Federal Reserve, has dismissed the idea that the central bank’s policies are to blame for the rise in global food prices to a record high that helped trigger political unrest in Egypt.

Mr Bernanke said that the rapid growth of developing economies was behind the increase in food prices, rather than the Fed’s decision to embark on a second, $600bn (£371bn) round of printing money. “Clearly what’s happening is not a dollar effect, it’s a growth effect,” Mr Bernanke said in a rare question and answer session with journalists at the National Press Club in Washington on Thursday.

The United Nations Food and Agriculture Organization (UN FAO) has warned that high prices, already above levels in 2008 which sparked riots, were likely to rise further.

The FAO measures food prices from an index made up of a basket of key commodities such as wheat, milk, oil and sugar, and is widely watched by economists and politicians around the world as the first indicator of whether prices will end up higher on shop shelves.

The index hit averaged 230.7 points in January, up from 223.1 points in December and 206 in November. The index highlights how food prices, which throughout most of the last two decades have been stable, have taken off in alarming fashion in the past three years. In 2000, the index stood at 90 and did not break through 100 until 2004.

Surging food prices have come back into the spotlight after they helped fuel protests that toppled Tunisia's president in January. Food inflation has also been among the root causes of protests in Egypt and Jordan, raising speculation other nations in the region would hoard grain stocks to reassure their populations. bdolreza Abbassian, an economist at the FAO, said: "The new figures clearly show that the upward pressure on world food prices is not abating."
But America's latest dose of quantitative easing has drawn heavy criticism from overseas that it will only stoke an inflationary problem that many developing economies are having to tackle.
“It’s entirely unfair to attribute excess demand issues in emering markets to US monetary policy,” Mr Bernanke said.
The Fed chairman also urged Congress not to use the fact that the US government will technically have to raise its legal debt limit as a “bargaining chip” in the debate over how to cut America’s budget deficit. The government is projected to hit the current debt limit of $14.29 trillion in May, and Congress will be required to vote to extend it. Republicans and some Democrats are threatening to vote against it without immediate cuts in government spending.
“I would very much urge Congress not to focus on the debt limit as the bargaining chip in this situation,” Mr Bernanke said. “We need to be very careful not to create any impression that the US won’t pay its creditors.”
Mr Bernanke also added that he is optimistic that the rate of job growth will accelerate over the next couple of quarters.

https://teakdoor.com/newthread.php?do=newthread&f=21

Bernanke is the most dangerous man alive today.

He is stupid, and also a liar.

With any luck he will be the first to recieve a pitchfork in the side of his head.

Well, people warned that the QE2 (Ron Paul) would increase food prices globally. Some believe that was the intention!

Originally Posted by blue

Quantitative Easing causing inflation ?

What else ? As long emerging markets don't revalue their currencies against the greenback they are doomed to share the inflationary effect with the USA.

Washington's Blog

Originally Posted by wefearourdespot

Originally Posted by blue

Quantitative Easing causing inflation ?

What else ? As long emerging markets don't revalue their currencies against the greenback they are doomed to share the inflationary effect with the USA.

I agree QE + very low interest rates.
Some alternative arguments for food price rises are
''1)Poor harvests, drought and flooding.
2)Use of corn for ethanol
3)Degradation of fertile land and increased building on fertile land
4)Change in the diet of south and east asia from veg to meat as GDP increases
5)population of the world increasing from just over a billion in 1900 to 7 billion now.''

I would put interest rates up to 5 % or higher ,let the greedy sods with several buy to let houses ,or huge mortgages suffer for a change .

Originally Posted by Spin

Bernanke is the most dangerous man alive today.

He is stupid, and also a liar.

With any luck he will be the first to recieve a pitchfork in the side of his head.

I disagree, a bit simplistic to characterize him like that

he really saved the say so far, and hard choice had to be made