Our beloved Fed chairman Ben Bernanke (aka. "the Ben Bernank") testified before the Congress this week. Most observers were interested in his thoughts on inflation (Tech Ticker).
Testifying before the Senate Banking Committee on Tuesday, Bernanke made the following comments in regard to higher commodity prices and inflation:
- Higher energy prices are likely to cause "at most, a temporary and relatively modest increase" in U.S. consumer prices.
- "Rising global demand for raw materials...coupled with constraints on global supply in some cases," are largely responsible for the recent increase in commodity prices, not the Fed's easy money policies.
- "While obviously a problem for a lot of people," higher gasoline prices don't yet pose a major threat to the recovery or inflation.
Of course, Bernanke likely feels he has to project calm about these issues and we can't know what he's really thinking...
The Nymex front month contract stands at $101.59/barrel. The nation's average gasoline price is $3.427/gallon, whereas it stood at 3.101/gallon one month ago. Anybody who has visited a grocery store lately knows that food prices are going up at an alarming rate. And so on.
As I explained in Sarah Palin Is Right About Food And Energy, the Ben Bernank focuses only on "core" inflation, which excludes "volatile" food and energy prices. I wrote that post in November, 2010, long before the troubles in North Africa got underway. These geopolitical shocks have just made a bad situation worse, especially for those who live in the lesser of America's two economies.
An old favorite came to mind as I read about the Ben Bernank's testimony (video immediately below). After that we've got Henry Blodget and Aaron Task discussing "non-core" inflation, the continuing absence of an American energy policy, and the possible End Of The World should Saudi Arabia become embroiled in a Libyan-like rebellion.
Things may be getting tougher for you folks, but the Ben Bernank is feeling no pain.
Repeat after me "there is no inflation, there is no inflation, there is no inflation. If there was, wouldn't the all knowing chairman of the Fed know?
Don't listen to that man behind the curtain. The Bernank must think he is the Wizard of Oz. He also believes that at the end of every QE rainbow there is a pot of gold. The man lives in an alternate reality than the rest of us.
He's doing such a good job that the dollar is down to 76 and gold is over 1400. Heckuva job Ben.
Posted by: Queenbee | 03/03/2011 at 11:49 AM