Upswings and downfalls

Despite rising inflation in the United States, more accommodative monetary policy in the early months of 2006 will accelerate US economic growth. This stronger growth will push international oil prices toward US$100 per barrel by mid-year, causing much higher global inflation and foreign capital flight from the US. With its credibility diminishing, the US Federal Reserve will be forced to tighten monetary policy dramatically, leading to an abrupt slowdown in global economic growth in the second half of 2006.

The financial media and the Fed have trumpeted the ability of the US economy to withstand rapidly rising energy prices. The Fed
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