Thursday's sharp rally in stocks, bonds, and commodities notwithstanding, in the long run, the Federal Reserve's new round of quantitative easing (QEII) will harm us all. In the short run, the wealthy will do well. They get to use all the newly printed money first. The investing class will cope . But those without savings and investments face a daunting struggle. Prices, which are already increasing, are intentionally being forced higher by the Federal Reserve. Rising prices in this economy will be exceedingly tough on those with marginal means. The problematic and potentially destructive concentration of wealth in our country is going to increase. In a nutshell, our government is demanding that those least able to shoulder the burden of unwinding through inflation decades of government fiscal and monetary irresponsibility. This is greed of the highest order.
Consider food prices. The Department of Agriculture made the following statement last month:
Although inflation has been relatively weak for most of 2009 and 2010, higher food commodity and energy prices are now exerting pressure on wholesale and retail food prices. Hence, food inflation is predicted to accelerate during the final months of 2010 and the first half of 2011, leading to a forecast of 2 to 3 percent food price inflation in 2011.
Accelerating food prices were forecast by the government due to commodity prices before the Federal Reserve decided to give inflation a jolt. We'll have to see, but 3% inflation could easily be a low estimate. Rising food prices hurt who the most? A Walmart clerk or a Walmart vice president? The Wall Street banker or the retiree living on social security? The answer is obvious.
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