Wednesday, November 10, 2010

Phil Flynn: Is QE2 A Sin?

The Fed may be trying to save the economy with the printing of more money but the poor battered US consumers are so far bearing the brunt of this economic policy and let’s face it, it is a SIN. At the last Fed meeting the Fed famously said that it was, “prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time”. What they didn’t want to tell you was that time was now. It was President Gerald Ford that wore Famous “Win” button which stood for “Whip Inflation Now”. The Fed now should wear a “SIN” button which stands for “Start Inflation Now” and the way the commodities markets have responded, it’s probably time that the Fed start doing penance and a few Hail Mary’s. Because let’s face it, this QE2 is basically a Hail Mary pass.

You see if the Fed policy does not shock and awe the economy out of its stupor, then we may have printed 2.1 trillion dollars for nothing and the only thing that we may have to show for it is higher prices of commodities. With an economy that is still struggling, those higher prices that may kill the consumer. You see it seems that not only is gold and silver rising but those esoteric inflation items that like to be swept under the rug and ignored by some economists are rising as well, like food and energy. Not to mention the proverbial and actual shirt off your back. Have you checked out cotton prices lately? Cotton prices are up 100 percent this year, gold up 29%, soybeans up 27%. QE2 hopes to create economic activity but the consumers may have to pull back as their wallets get squeezed. Take a look for example at the stats on gasoline. Gas prices soared, rising from a national average.......Read the entire article.



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