Bob Chapman: As If The Fed Planned To Do It All WrongSubmitted by bobbyw24 on Mon, 01/24/2011 - 07:39
The International Forecaster
January 23, 2011
As of Wednesday we have seen the euro rise 7 straight days, which caused the USDX to fall to 78.14, this in spite of having 10-year rates in Spain, Portugal and Ireland rising 3 bps.
Both food and energy prices have risen at double-digit rates. This is an inflation reflection of 1979-80, 1996 and 2008. In the 1979 and 1980 and in the 2008 period our inflation gauge measured real inflation of 14-1/4%. Both occurred in recessions similar to today’s inflationary depression.
Today’s energy prices will reflect a loss in buying power of more than $60 billion in the US alone. Higher grain and meat prices will add $40 billion to total, a loss in buying power of $100 billion. By the looks of it costs and inflation will rise further causing further cuts in GDP consumption. These costs will affect 70% of the stimulus and QE2. That means very little consumption gains and stagnant unemployment.