It has been a while since I criticized my favorite Federal Reserve chairman, Ben Bernanke. I’ve been busy teaching school and Bernanke, as always, has been busy destroying the dollar and with it our economy and standard of living. So, nothing new and out of the ordinary has happened to warrant a post about the second-term Fed chairman. However, last Monday night he made big news when he said that our current price inflation is “transitory,” and based on supply and demand issues in energy and commodities. He went on to say, "Our expectation at this point is that in the medium term inflation, if anything, will be a bit low.”
So why do I consider Bernanke’s remarks to be big news? Because when predicting the future economic prospects of our country his prognostications have been less than stellar, to say the least. He never saw the housing bubble coming, he misjudged the seriousness of the problems in the auto industry and was totally clueless about the potential for big bankruptcies on Wall Street. What’s worse is that he was still spewing his pablum about how everything was okay on the eve of the financial crisis! Thus, with his newest pronouncements on our current state of price inflation, why would anyone give his remarks any credence?
We can give Bernanke credit for one thing: he didn’t deny prices for many things are rising. Cotton is at its highest level in a decade. Copper is at its highest price in forty years. Corn, wheat, and soybeans are up. Of course, all Americans are seeing steeper price levels at the pump as oil has risen above, and remained over, $100 a barrel. But, for Bernanke to state that the situation is temporary is not credible. To be sure, there are extenuating circumstances behind some of the cost increases. Weather conditions in some parts of the world and Middle East unrest have had an effect somewhat on crop and oil supplies. However, given the trillions of dollars Bernanke has injected into the stagnant economy through low interest rates, quantitative easing, and monetizing of the federal debt, it’s no coincidence that these commodities which are priced in and bought with dollars are seeing price increases.