Busted: Bankers and The Global Economy

July 3, 2008

Inflationary Fears Explode in EU

The European Central Bank is fearful of an inflationary explosion. Political pressure has been to ease credit pressures and lower interest rates. The central bank explains that if the bank is not “resolute”, inflation will explode. Jean-Claude Trichet believes that the economic situation can be mastered. Apparently, the central bank believes by exercising discipline, inflation can be tackled. What central banks around the world, including the Bank of England and the Fed, fail to realize is that printing money or issuing monetary credit to bankrupted banking institutions or for politically expedient funding is driving up inflation.

In the past thirty years, central bankers have conveniently refused to acknowledge the cost of food and energy into their economic calculations for inflation. Recently, the high cost of these commodities have forced them to admit rising and uncontrolled inflation as well as revising their mathematical formulas.

Apparently, the global economic community wants to believe that high oil prices are driving inflation up. While market speculation looks like the cause for rising energy costs, what is really going on behind the scenes? Is it possible that runaway inflation is driving oil prices up? That is food for thought.

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