Ongoing rise in oil prices bad for economy – Bernanke
1 Mar, 2011 16:34
Speaking to the US Congress, Federal Reserve Chairman Ben Bernanke explained that prolonged increased in the cost of oil would pose a threat to the US economy.
Bernanke noted a more plausible outcome from oil spikes would be a temporary and mild as opposed to rampant inflation. He told the Senate Banking Committee he had full confidence the US economy would show growth this year, but said there was little chance it would decrease US unemployment numbers now lingering just above 9 percent. Citing high consumer prices in oil, food, gasoline, real estate and other general commodities, Bernanke argued that many Americans may spend less, in turn contributing less money to the market. “The most likely outcome is that the recent rise in commodity prices will lead to, at most, a temporary and relatively modest increase in US consumer price inflation," Bernanke saidHowever, if uncontrolled inflation were to take hold, it would threaten the US economy. Bernanke said the Fed was watching the situation and insisted federal policies in place were necessary to do so. Although many have expressed concerns over inflation from US federal monetary programs, he claimed the $600 billion bond-purchase program must remain in place for the stability of the economy. The bond-purchase program is set to end in June. The program was created to spur more spending and ignite growth in the US economy by lowering rates on loans while also bolstering stock prices. However, many in the Fed itself and many predominant Republicans have opposed the program, arguing it will only trigger greater levels of inflation and heighten speculative buying on Wall Street. Grater speculation in turn could lead to financial bubbles in the prices of stocks and bonds.Bernanke continued to blame these types of problems on others, like China and developing economies. He alleged the fault has nothing to do with Fed policies. Bernanke also insisted, while unrest in the Arab world has caused spikes in oil prices, the effect is temporary and will not jump-start widespread inflation. Author and researcher Adrian Salbuchi argued that, while the rise in prices on oil may be temporary, other factors may not. Overlapping problems that relate to rising oil prices, such as long term effects on US and European power could in turn be weakened and the notion of the sovereign nation-state eroded. “From the point of view of the long term planning, of a power elite, a global power elite that is wrapping up globalization after 20 years because it has served most of its purpose and it’s ushering in a coming world government, in a coming world government you would need to, in a controlled manner, erode the relative power of nation-states. That is what I believe is happening now in America and also in North Africa,” he said. The US of China and others as a scapegoat is a natural defense, said Salbuchi. Bernanke is pushing blame for failure onto others to defend his own policy than to blame himself. But, the bigger issues, he argued, is not the agenda of the Fed, Bernanke or the United States. There is a bigger globalist agenda at play, he argued. “We have to understand what the medium and long term agenda are of the Bilderberg, the Trilateral Commission, the Council on Foreign Relations, and such other think tanks that work in favor of the global planning of private interests,” he added. “It’s ushering in a coming world government.”