Inflation Is Everywhere By: Curtis Ophoven 5/20/2008 - 4 Comments Inflation is increasing all around the globe, pushing many nations into a recession. Your Ad Here Here are some of the inflation rates: Venezuela (22pc), Vietnam (21pc), Latvia (18pc), Qatar (17pc), Pakistan (17pc), Egypt (16pc) Bulgaria (15pc), The Emirates (11pc), Estonia (11pc), Turkey (9.7), Indonesia (9pc) Saudi Arabia (9.6pc), Argentina (8.9pc), Romania (8.6pc), China (8.5pc), Philippines (8.3pc), and India (7.6pc). 50 years ago the dollar was so strong that many nations pegged their currency to the dollar. Most of the Gulf States are linked to the dollar, forcing them to shadow the US Federal Reserve's super-loose interest rate policy. Reference Article: OECD warning as stagflation goes global International Monetary Fund (IMF) warning Last month the IMF said ‘global inflation cannot be ignored’.  ‘Policy-makers should act aggressively if things start to get out of hand’.  Skyrocketing energy and commodity prices have dangerous repercussions for the world economy, said John Lipsky, the fund's first deputy managing director, as oil prices hovered near a record above $123. Reference Article: Global inflation cannot be ignored: IMF What is the Cause of Inflation? How could inflation have been so low for decades and now suddenly be increasing all over the world?  What is causing the rapid increase in inflation? The real answer is the US Federal reserve monetary policy.  Chairman Ben Bernanke knows this, but believes that he is doing the best thing that he can to save the financial markets from a collapse - and put more people in financial hardship. This is also the reason that the rest of the world cannot do anything about it.  They are intrinsically tied to the dollar and the monetary policy of the Federal Reserve.   I don't believe Bush understands the crisis that we are in, but he trusts Bernanke and Paulson as he trusted Allan Greenspan.  Bush trusts that they will get us through this turbulent financial time and lead us to higher ground.  The world's financial leaders are at the mercy of the US Fed monetary policy, because we control the world reserve currency (the dollar).  All they can do is react to our policy changes.  But, because of this, they are not happy and several are threatening to abandon the dollar.  Even Brazil is now talking about abandoning the dollar. Reference Article: Dollar losing clout around the world Social Unrest World Bank President Robert Zoellick warned earlier this month that soaring food and energy prices were a serious concern that threatened to foster social unrest in an estimated 33 countries. Reference Article: Paulson: Food Price Controls Won't Work Blame the Farmers Actually, it’s better for us if the world blames the farmers for producing Ethanol and profiting from rising food prices, rather than realizing the real problem is our Federal government’s monetary policy.  Once the world realizes that the US is exporting global Inflation, causing many to starve to death, they will turn to another currency like the euro or Yen or a combination or perhaps create a new regional monetary union to stabilize the global money supply and stop inflation. If this happens, the dollar will sink like a rock.  I think that by the end of the summer the pressure on Bernanke will be so great that he will be forces to start considering an increase in interest rates.  Related Articles Dollar Has No Where to go but Down How Bad Could Inflation Get? McCain Vows to Fight Spending as Recession Looms Congress Needs to Take Drastic Action Paulson’s Plan … Is a Distraction   Subscribe via RSS Copyright © 2010 PennyJobs.com. All rights reserved. << FREE >> Weekly Newsletter... Signup today and start receiving our free weekly newsletter! Reader Comments Comment 1 Bob Says: on Tuesday, May 20, 2008 11:25:46 AM It's not just the "all mighty fed"... it's basic supply and demand - China, and India to name just 2 emerging markets that have experienced high growth which equals high demand for natural resources and energy... Comment 2 Curt Says: on Tuesday, May 20, 2008 10:50:11 PM @Bob - I've considered the supply and demand argument, but it just doesn't make sense with inflation spiking all over the world. China and India have been running at 6-8% growth rates for years without creating a supply and demand problem, so why would their growth (which is slowing) suddenly be the cause of inflation? Very few economist seems to want to blame the Fed, but the Fed is the only one printing dollars and flooding the world with them by lowering the interest rate below inflation. This is perhaps 99% of the problem, even if there are a few other factors making up the other 1%. Comment 3 Maggie Says: on Saturday, May 24, 2008 4:58:09 PM Well I sure hope you are right about the Fed going to raise the rates---cause our CD's are tanking-- My other concern is still another terroist attack-- which is what started our failing economy, didn't it??? 2001--CD interest rates were @ 7% until the TWin Towers Attack--they dropped to 1% in no time-- Write a Comment Please keep comments civil and on-topic. Abusive or inappropriate comments will be removed without warning.  Name (required)     Email Address (required)     Website URL  Comment

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