Another Round of Consumer Price Increases on the Way
BY CLIF DROKE
The ongoing economic depression has the middle class behind the proverbial eight ball. Not only has it resulted in the deflation of housing values but the stimulus efforts of the last two years have resulted in increased retail prices. This is one of the important signs that the depression has a lot longer to run, for until we see a substantial drop in consumer prices deflation’s work isn’t done.
As anyone who has been grocery shopping lately can tell you, prices are high and getting higher all the time. This is a consequence of the Fed’s second quantitative easing (QE2) initiative, which directly resulted in a huge increase in commodity prices. After the 2008 credit crisis and recession, food prices were starting to show signs of actually declining for the first time in years. But as the Fed refuses to allow even a hint of deflation in the U.S. economy, QE2 was begun in order to stop this trend of lower prices from getting established. Instead, prices started accelerating higher once again.