Ben Bernanke, Chairman of the Federal Reserve, had the first ever press conference in the nearly century history of the institution. He said not to worry about inflation and that unemployment should slowly decline over the next two years. I beg to differ. Sure, employment should improve but inflation is coming. Look at the price of gold: it was going for $880/oz. in Jan. 09 but is currently trading at $1540/oz. Silver has gone from $11/oz. to $49/oz. in that time. Gas and food are also climbing. Oh, the government will assure you that gas is going up because of speculators and greedy oil companies. Never mentioned will be that with each new dollar that is printed, the ones in your wallet become less valuable.
The primary purpose of the Fed was originally to keep the money stable, make it a reliable store of value. Inflation is anathema to that. However, governments love inflation. Inflation is a tax. Inflation allows government to continue spending or to pay off debts with devalued currency.
None of what I say would come as a revelation to Bernanke. So, he knows inflation is coming. He knows that to rein it in will require a rise in the interest rate which will choke off job-creating investment. None of this is new. He, better than most, knows where these policies have led in the past. What is he thinking? He didn't explain it in his unprecedented press conference.
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