Gold News

Bernanke's Inflation Blame Game

Ben Bernanke only takes responsibility for "good" inflation...

PRICES FOR BASIC FOODSTUFFS may be going up, but don't you be fooled into thinking that has anything to do with inflation, writes Dan Denning in his Daily Reckoning Australia.

It's the floods. And the earthquakes. And it has nothing to do with exploding global money supply.

And pay no attention to silver futures making a 31-year high either. That has nothing to do with expectations for inflation. Or actual inflation. Or any kind of real or theoretical inflation at all.

In fact, US Federal Reserve Chairman Ben Bernanke is of the solid belief that the rise in global commodity prices is a basic function of too much demand and not enough supply. Late Monday night in America Bernanke said, “Those commodity prices are being driven primarily by global supply and demand. Those prices are affecting the overall price indexes of the United States...I think the increase will be transitory, that it will pass, and we will go back to a level of inflation that is consistent with our price stability mandate."

To "go back" to a level of inflation that is consistent with "price stability" means the current level of inflation is not consistent with price stability, unless we're missing something. What Bernanke is also forced to acknowledge is that consistent easy money policies at the Fed have finally found their way into rising consumer prices.

Thus passes the glory of quantitative easing. It has produced the "good" kind of inflation since March of 2009 in the form of higher stock prices (and bank profits). But now that it's suspected of being responsible for the “bad" kind of inflation in the things people buy every day, it will have to be sent to the policy naughty least until stocks fall far enough that the public is keen for more "stimulus".

Want to protect the value of your wealth by Buying Gold...?

Best-selling author of The Bull Hunter (Wiley & Sons) and formerly analyzing equities and publishing investment ideas from Baltimore, Paris, London and then Melbourne, Dan Denning is now co-author of The Bill Bonner Letter from Bonner & Partners.

See our full archive of Dan Denning articles

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