RATE HIKE FOLLOWS FAILED BOND SALE
Just as Obama delayed sending troops as long as he could so did Bernanke. Taliban progress forced Obama's hand; A bad bond sale forced Bernanke's hand. Why else would he raise rates when we are teetering on the edge of deflation and the price of dollar is rising in relation to the Euro? Last month Core Consumer Prices Fell for First Time Since 1982 as "prices fell for hotel rooms, home ownership costs, new cars, airfares and clothing" and given the current slack in the economy, are expected to continue to do so.
That is the reason, Bernanke's tightening is"surprising" to those who do not take into consideration the recent global response to the bond offering. It is clear that the Chinese took one look at Obama's irresponsible budget and not only stopped buying dollars, they began selling them and scared the markets. With his"surprise" rate hike, Bernanke hopes to convince the Chinese, Arabs and the like that he can be trusted not to inflate the dollar to solve the country's souring debt problem. The next bond sale will tell if the move worked.
In the meantime. Sang Moon is right to note that:
If core prices exclude food and energy, doesn't that mean that core prices are effectively mostly non-essential goods? This means that inflation is increasing for essential goods which is sucking money and demand from non-essential goods which would result in lowering core prices. This means inflation is indeed increasing for the things that matter to most people.
Of course, no demand means no growth and no jobs. Not that economists get it. They continue to be surprised: US new jobless claims post surprise jump. Even worse, the president who was supposed to focus like a laser on jobs, refuses to give up on his job destroying efforts to pass an expensive health care plan.
comments powered by Disqus
- Previously untouched 600BC palace discovered under shrine demolished by Isil in Mosul
- Slate reveals that despite our apology, nothing’s been done to help Guatemalans infected in an experiment worse than Tuskegee
- Russian government website notes that game maker has sent “Secret Hitler” to every US senator
- Scholars debate the future of NATO
- Trump, Putin, and the New Cold War
- James Oliver Horton remembered as a pioneer for African American research
- Theodore Lowi, Zealous Scholar of Presidents and Liberalism, Dies at 85
- What LT. Gen. H.R. McMaster will offer as new national security adviser
- Fareed Zakaria hails historian Nigel Hamilton’s series as the memoir FDR never had the opportunity to write
- French Historian Says He Was Threatened With Deportation at Houston Airport