With inflation rising, the monetizing of debt (quantitative easing) appears to be working as the FED hoped, but, probably not the way they hoped.
By Daniel at 12 December, 2009, 2:42 pm
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quote from Import/export report that came out with retail sales. (inflation is about 5% as defined by those who look at prices as the definition)
quote:
Import prices have risen in eight of the past nine months, increasing 10.1 percent over that period…..
……Nonfuel import prices rose 0.4 percent in November as higher prices for nonfuel industrial supplies and materials, capital goods, and foods, feeds, and beverages contributed to the
advance.
…..Higher prices for soybeans, corn, and wheat led the upturn in agricultural prices.
http://www.bls.gov/news.release/pdf/ximpim.pdf
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The consumer is already being squeezed but, it is happening gradually so far, as it is still about 5% according to the way we use to calculate it before “substitution” and hedonic adjustments.”
The global consumer is going to determine our prices and the global lenders are going to determine our fate with the dollar and other things. We are no longer in control of much because, unlike Japan where their debt is mostly owned by Japanese, we have our debt in the hands of people competing with us for business.
There is going to be a depression, one way or the other. At least that much we can agree on. It will not be our demand that determines much of anything. It will be the dollars already in foreign nations that will determine the value of the dollar. When the velocity of that money picks up, it will trump the low velocity of money we have here.
The more the global economy continues to grow, illusion or not, the more likely prices here will rise and the dollar will go down as more and more dollars are spent and more nations sell U.S. debt. While China is the 800 # gorilla, a lot of other nations have our debt and if they start selling more, they may force China to depeg from the dollar and start selling our debt to spend even more on global mines, oil fields, infrastructure loans, and their military and more stockpiling for the coming years.
- JanPaul
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