Atlanta Fed President Dennis Lockhart told a group at that National Association of Business Economics in Arlington, Va. that if the price of oil keeps climbing, the Fed will need to purchase more assets, or QE3.
Of course the men at the Fed don’t believe all of this new liquidity they are creating has anything to do with the prices of oil or food. Oil over a $100 a barrel is an external shock you see. A bolt of lightening out of nowhere. Those crazy kids in Cairo twittering and whatnot.
Ben Bernanke testified last week that inflation will remain tame. And when pressed about oil and food prices, he said “My sense is that the increases we’ve seen so far — while tough for many people — do not yet pose a significant risk to the overall recovery.”
He told the Senate Banking Committee consumers would absorb the increased costs but that these price increases would be “temporary and relatively modest.”
The Fed chair won’t take his foot off the monetary gas, “Until we see a sustained period of stronger job creation.”
“We have all the tools we need” for “a smooth and effective exit at the appropriate time,” Bernanke testified. But if the Atlanta head Fed man’s comments mean anything, Bernanke’s get away car isn’t revved up and idling outside, but instead is up on the rack at the Fed garage, with mechanics adjusting wires and checking fluid levels.
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I am pretty sure we will see the economic down turn blamed on the oil prices.Then when the fed prints more the oil gets ever more expensive and the senate will explain rising food prices with rising gas costs etc. Thus the FED needs to print more money to recover the economy. The problem is the deficit that has to be paid by someone and that someone has to be the fed.
So back warded, yet so predictable. I hope we don’t see a revisionist history emerge from this.
With oil at $100 barrel and gold at $1400 an ounce, I can still by 14 barrels of oil with 1 ounce of gold. Using gold as a numeraire, a la Peter Schiff, oil is cheap by historical standards.
The national debt is $14 trillion – that is 10 billion ounces of gold – I seem to recall there is only 6 billion ounces of gold in circulation. (Roughly 1 ounce for every person on the planet).
140,000 tonnes above ground = 4.5 billion Troy ounces of gold, which translates into $6.3 trillion at $1,400/ounce.
>> A bolt of lightening out of nowhere. Those crazy kids in Cairo twittering and whatnot.
LOL
“Bernanke’s get away car isn’t revved up and idling outside, but instead is up on the rack at the Fed garage.” The tires are flat hence the needs for inflation!!!
But of course, all he is doing is trying to pump air into the gas tank.
Actually Ben Bernanke has a Chevy Volt – so all he has to say is (will that be cash or ) charge!
On a point of trivia, while we are talking about General George Armstrong Custer’s last words, what dubious distinction do both our last presidential candidates John McCain and Barack Obama share with Custer?
(I’m sure Watson would get this immediately on Jeopardy).
What is the answer?
All three finished bottom of their class.
I might have found out what his cool-down tool is: isn’t it just called “more taxes!”?
I’m wondering though what hideaway Bernanke will be able to find after the consequences of his handling get clear to the population… I’ve been talking to a respected European Banker two years ago, and he was foreseeing back then 10 % inflation “soon” with no way around.
Bernanke will need his get away car (and also an invisible cloak). The bailout to foreign banks was not to help out his bank buddies, it was to stash wealth like Mubarrak and Ghadafi! The stash was for himself and also for the members of the inner circle of the unConstitutional coup who saw the world economy unraveling as a result of their economic terrorism and did not want to be left without an exit strategy. Bernanke knows who these traitors are and so capturing him before he flees is very important.
Translation: certain extremely large and well-connected banks [*cough* Fed owners] shorted oil and will require hundreds of billions of fresh money given to them in order not to have to declare a loss and cut salaries and bonuses.
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