We may no longer be able to rely on cheap imports from China and other nations to dampen inflationary forces generated by profligate Federal spending, abetted by the Federal Reserve’s limitless expansion of the money supply.
As I noted in Exporting Inflation to China, Our failure to maintain a sound currency guarantees a trade imbalance with China and threatens a repetition of the stagflation of the 1970s.
Two current articles from the Wall Street Journal suggest that we may already be headed in that direction. Subscribers to the online Journal can access the full articles here and here.
In Wage Gains Fan Inflation Worries reporters Marcus Walker, Greg Ip, and Andrew Batson write:
New evidence that American companies are having a hard time keeping labor costs under control raised worries about a pickup in inflation, sending stocks tumbling.
The Labor Department reported that the sum nonfarm businesses pay their workers for each unit of production rose at an annualized rate of 1.8% in the first quarter, sharply exceeding its initial estimate of 0.6%....
“Even if economic growth is not gangbusters, the Fed could end up with an inflation problem,” said Stephen Stanley, chief economist at RBS Greenwich Capital in Greenwich, Connecticut.
In Years of Global Growth Raise Inflation Worries Mark Whitehouse reports:
For the past decade, low-priced labor from China, India and Eastern Europe has helped much of the world enjoy economic growth without the sting of inflation. Now that damper on prices is beginning to reverse—and global inflation pressure is starting to build.
Visit MoveOff Network Members
Back to summary...
