Most ominous is the fact that by turning real interest rates negative, the Fed has intensified speculation and put energy and food markets under accelerating and boundless rising pressure. Commodity prices have become predictable for even the non-expert; conditional on the Fed’s current stance, pick up any number for oil, $150/bl, $200/bl, $250/bl, and we will be there. Similarly for rice, corn, and wheat. The Fed has made speculation more remunerative, credit riskier, and financial savings less attractive.
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