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2008-06-27 Home Front Economy

Fed may call for end to dollar peg for commodities

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Posted by lotp 2008-06-27 00:00|| || Front Page|| [1 views ] Top

#1 For once I'm in agreement with the Brits and EUros. Greenspan's last 10 years were a disaster and Bernanke has done nothing to repair the damage. Inflation occurs because too many dollars are chasing too few goods. The Fed is in charge of the supply of dollars. They are producing too many.

The Fed should quit being a crybaby. If the Chinese want to pursue policies that are detrimental to Chinese consumers that's their business. It gives the Fed no excuse to pursue policies that are detrimental to US consumers. If the Fed still doesn't like what China's doping, it should recommend to the executive and legislature that we impose tariffs on Chinese imports.

Posted by Nimble Spemble 2008-06-27 07:04|| 2008-06-27 07:04|| Front Page Top

#2 If the Chinese want to pursue policies that are detrimental to Chinese consumers that's their business.

The Chinese pursue policies that keep the good o'boys in power. All else falls out from that. Not being capitalists, that means they're willing to eat billions of dollars if that means that Ma and Pa Lee are happy little peasants.

Posted by Procopius2k 2008-06-27 08:36|| 2008-06-27 08:36|| Front Page Top

#3 The Fed is in charge of the supply of dollars. They are producing too many. That isn't the only issue & may not even be the main one. Creation of loans contributes to the supply of dollars. The Housing Bubble was only possible due to a credit mania, where a huge amount of loans was made largely to deadbeats & scam artists. The Fed's contribution was holding interest rates too low for too long. Other elements of the government contributed by lax or non-enforcement of existing financial regulations.
Now that real estate is massively deflating, those with money to invest are pouring it into commodities in a last ditch effort for profits. There is no way that the demand for petro imports has increased 100% in 12 months to match the rise in oil prices. Oil being an essential element in world trade and in national economies, its price spike has affected almost all other commodities.

Posted by Anguper Hupomosing9418 2008-06-27 09:32|| 2008-06-27 09:32|| Front Page Top

#4 Exactly - the run-up in oil isn't due to "speculation," it's due to investment dollars needing somewhere to go. When the paper Wall Street pushed in the credit bubble zeroed out, the money went into hard assets like gold, oil, grain...

Posted by M. Murcek">M. Murcek 2008-06-27 09:56|| 2008-06-27 09:56|| Front Page Top

#5 The Fed's contribution was holding interest rates too low for too long.

The Fed does that by supplying too many dollars. I will not disagree that bad loans were made and the Fed allowed that to happen. But that was done at the behest, nay, the demand, of the legislature. Creating too much money supply is the responsibility of the fed. And the problem did not start with housing, it started as far back as the Asian debt crisis of 1997 and hasn't stopped since as we have had bubble after bubble created with the Fed responding when it bursts by pumping in more liquidity to keep the markets afloat and ignite the next bubble. Time for the new Volker.

Posted by Nimble Spemble 2008-06-27 10:59|| 2008-06-27 10:59|| Front Page Top

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