http://www.atimes.com/atimes/Global_Economy/HF22Dj01.htmlRecent hawkish comments by US Federal Reserve Bank chairman Ben Bernanke caused jitters in US and global equity markets; as is the typical first reaction when there is a sense of panic in the market, US investors liquidated some of their more speculative foreign investments and repatriated the money. As a result, the US dollar enjoyed an overdue rally after it had been sliding for weeks versus major currencies.
This raises several important questions. Has Bernanke rung in a new era at the Fed? Will he be able to help contain inflationary pressures? And will the dollar regain its strength?
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Bernanke spooked the markets by daring to say what has been ignored for too long: inflation is heading America's way. Americans already experience inflation on anything they cannot import from Asia - from the cost of health care and education to the cost of local services. Low interest and tax rates in the US, combined with Asia's growth policies, have created an oversupply of consumer goods, leading to low prices for such goods and high commodity prices.
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Bernanke has a problem, a big problem: inflation is creeping up just as the US economy is slowing down. Some have pointed out that it is quite common for inflation to continue to climb for a couple of months as the economy is slowing down; as a result, we should not be concerned about this. These are the same "experts" who only saw the Internet bubble out of the rearview mirror, and still do not acknowledge there is a housing bubble. What many underestimate are the extreme pressures the US economy now faces:
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gotta remember, the neo cons want to ruin the US pocketbook