John Williams: Inflation Effect – Tough to Ignore or Contain
March 16, 2012
John Williams just warned that significant inflation will feed into the global system because of rising oil prices and the Fed’s policy to debase the dollar. Williams, who founded ShadowStats, also warned the US dollar will take a major hit because of global “dollar dumping.” Here is what Williams had to say about the situation: “With oil and gasoline prices pressured by market concerns over Middle Eastern political stability, monthly consumer inflation jumped in February and stabilized in the three-plus percentage range on a year-to-year basis.”
John Williams continues:
“The current level of inflation, however, stands where it is due primarily to the effects of the Federal Reserve’s efforts to debase the dollar, which, in turn, spiked global oil prices into the $100 per barrel range. The effects of the dollar-debasement and oil-price-spiking policies not only had direct inflationary impact on energy-related prices, but also—in the period following QE2—had an accelerating upside impact on inflation throughout the broad economy, as indicated by rising “core” inflation (net of food and energy inflation).
While the Fed and Wall Street like to tout “core” inflation, since rising food and energy prices can be ignored, protracted higher oil prices—in particular—eventually work their way into the broad economy and create inflation issues that are tough to ignore and for the Fed to contain.
The following graph reflects year-to-year “core” inflation as reported for both the CPI-U and PPI, since the onset of QE2. The annual CPI-U “core” inflation rate for February softened slightly, after 15 straight months of higher annual inflation.