Central bankers all over the world are following Ben Bernanke and copying his policy of printing enough currency to cheapen it to the point where inflation could be a problem. Growth and employment gains are still weak despite the rises in stocks. As the world banking system becomes flooded with cash, we will see commodities rise substantially.
By JONATHON M. TRUGMAN
Last Updated: 11:57 PM, April 7, 2013
Asia’s nuclear nightmare last week did not come from North Korea’s Kim Jong-un, but from new Bank of Japan Gov. Haruhiko Kuroda’s shock-and-awe bond-market implosion.
Central bankers across the globe have picked up Ben Bernanke’s troubled policy of printing enough currency to cheapen it to the point where inflation could become a problem.
If it were a book, it would be called “Currency Wars: A Race to the Bottom.” The central bankers’ mission is to fight the globe’s weak and teetering economy by passing around a little ink — printing ink!
(Here in America, our stock market has risen, thanks to much spilled ink, yet everything else is as weak as it can be. Growth and employment gains remain far too little. Yes, the unemployment rate went lower in March, but not through growth. It largely came from the 496,000 workers who packed their bags and said, “I’m not in the work force anymore.”)
This “inflate it till you make it” policy started in earnest last week with the Bank of England and the European Central Bank promising to keep the pedal to the metal by staying with their easy money policy, and then the Bank of Japan broke out its own big guns.
So what can we expect?
Prices will rise. Fuel and food costs will be higher by the time Mother’s Day gets here. And if you are thinking of buying a big-screen TV or other electronic gadgets from a Japanese manufacturer, or a Honda or Toyota, the time to do it is soon, before the much cheaper yen raises the price here.
As the world banking system is flooded with cash, commodities will likely rise substantially — like they did when the Fed began its quantitative-easing plan.
Ironically, some Fed governors last week were out talking up their successes like politicians shilling for votes, as economies teeter.
The Fed started this race to nowhere, and our economy is going nowhere fast.
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