Bernanke Finally Admits to Inflation Gain from Commodity Prices

Posted Mar 1st 2011 5:00PM by Connie Madon
Filed under: Market Matters, Economic Data, Politics, Commodities, Oil, Headline News, Federal Reserve

After two years of steadily rising commodity prices, Federal Reserve chairman Ben Bernanke finally admits to it. Quoted in Bloomberg/Businessweek in his testimony before Congress Bernanke said: "Sustained rises in the price of oil or other commodities would represent a threat both to economic growth and to overall price stability, particularly if they were to cause inflation expectations to become less well anchored."

"We will continue to monitor these developments closely and are prepared to respond as necessary to best support the ongoing recovery in a context of price stability."

Ben, what price stability? Oil is trading near $100 per barrel. Gasoline at the pump is nearing $4.00 per gallon. Wheat prices are near an all time high. Gold is at an all time high. Silver is at a 31 year high. Cocoa is at an all time high. And on and on.
Commodities traded in the spot market are also at all time highs. Iron ore is a good example.

The problem is that with worldwide demand exploding, this trend for higher commodity prices shows no sign of abating. Mr. Bernanke, the horse is already out of the barn.

What does the Fed plan to do? Apparently just print more money and give it to the banks so they can speculate as much as they want. JP Morgan Chase & Co. (JPM) just set up a fund to buy into Twitter, Zynga, and Skype. Goldman Sachs (GS) wants in on Facebook. Earlier this year JP Morgan bought $1 billion of copper.

Governments are stockpiling food and precious metals. Food riots are taking place in India and Africa.

Bernanke insists that he wants to create jobs. Just printing $600 billion and giving it to the banks won't do the trick. The Fed must have accountability. Where is this $600 billion going? Is it going to create jobs? How do we know that?

At some point Congress must make the Fed account for every penny it creates. It must be forced to go to the banks and demand accountability for the $600 billion and where it went.

Tags: 600 billion stimulus, accountability, Ben Bernanke, commodities, Federal Reserve, FederalReserve, food, inflation, inthenews, oil

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Reader Comments (Page 1 of 1)

3-02-2011 @ 7:25AM

john livers said...

Obama and Ben has screwed this country

3-02-2011 @ 9:50AM

lucky12ru said...

How much stock do Ben and Obama have in BIG OIL? BIG OIL have held Americans hostage with their manipulation of their prices!!! Diesel is your transport fuel and gas gets you to work. The more they charge for diesel will increase increase inflation. The more they charge for gas will be taken directly out of your pay check. Hoorah for the Republicans and BIG OIL!