Ben Bernanke money printing is beginning to have an impact.
Today's futures activity:
West Texas Intermediate crude oil is trading at $106.07 (+2.5%)
Gold is at $1757.20 up $31.30 (+1.85%)
Silver is at $34.35 up $1.13 (+3.47%)
Copper is at $3.8385 up $0.1305 (+3.53%)
Sugar is at $24.50 up $0.73 (+3.03%)
But, there is an opposing view. Paul Krugman sees deflation because P&G is distributing diaper coupons.
Is it going to have to come down to reminding Krugman that you can't eat diapers, new or otherwise?
Source
1 comment:
The Fed's view is that they need to prop upbanks. So they create all of this cash and give it to them nearly interest free. This funding allows them to buy government securities, giving the banks risk free profits while subsequently keeping the nation's borrowing costs artificially low. The low borrowing costs in the market also repress the incentive for Americans to save, since there is such a meager return on their investment.
The other positive side effect of inflation for the banks is that the rising prices will eventually trickle down into the real estate market. Inflation here should help to move prices up and out of the current state where mortgages are under water.
For the average consumer, though, the inflation is insidius. There is no incentive to save, creating conditions for poverty in old age. With depressed wages leading to stagnant or declining income, people are losing their paychecks one haircut at a time. The lack of demand created by lower incomes and higher prices will continue to plague are economy. This also means less people can afford homes, further repressing market value of real estate.
Post a Comment