Fed pause promises financial disaster

On the heels of the most expansionary monetary policy in the post- Word War II period, pushing the US ratio of domestic credit to gross domestic product to an unsustainable 226% in 2007 as compared with 184% in 2000 and 142% 1980 respectively, the US Federal Reserve has adopted an even more aggressive expansionary policy since August, with the stated objective of re-inflating the economy to jerk up housing prices and bail out failing banks.

In the process, the Fed has pushed the dollar further down and accelerated inflation in energy and food prices, causing oil prices to race from US$70 per barrel to $126 per barrel, and food prices to levels that have resulted in malnutrition and riots.

AsiaTimes