|
Are you getting worried about inflation? It seems
amazing to me that there is so little talk about inflation and the long bonds
are rallying. Meanwhile, you have oil at $108 WITHOUT ANY DISRUPTIONS OF
SUPPLY. Can you imagine if we get a supply disruption? It seems clearer and
clearer to me that oil is on its way to $200 if not $400.
Look
at all the articles I've posted over the last couple of days on ag inflation
and hoarding in 3rd world countries.
Inflation
is happening throughout the world on a massive scale. Friends in Nicaragua
report that prices are going up on a nearly weekly basis now. From what I
read, other countries are seeing lots of inflation. Imports to the U.S. seem
to be slowing dramatically, which means that consumption will have to slow
down faster than supply, or else we will see prices go up as well. Exports
are booming (especially ag exports) so that increases the pressure on the
need for consumption to fall domestically to prevent price increases.
There
are more and more strikes going on worldwide as workers demand raises to help
with higher costs. Companies will have to start passing on these higher
costs. Meanwhile, lots of industries are cutting back supply (airlines,
gasoline refiners, etc.) in order to maintain profitability. This will only
add to the supply issues.
Yet
the Fed is just fanning the flames.
The
mentality has not moved to hoarding yet. Investors are starting to do it with
oil and some other futures. But that is about it.
I
fear that the shift to hoarding is about to begin and the consequences could
be very dangerous. The
Fed is playing with fire here.
Fake Ben
Bernanke
FakeBen.com
FakeBen is a blog
to monitor the Fed and its actions and encourage community participation. At
FakeBen, we believe that the Fed policy of the last two decades has created a
credit bubble as large as that created in the 1920s. This bubble will lead to
either inflation, a recession, or both.
| 
