Congress sees their voters facing prices that are rising faster than incomes due to Fed rate cuts driving the $ down.

Bernanke testifies that price hikes for food and energy are not a problem for the Fed until wages go up.

So, he’s going to keep cutting rates and driving the cost of living higher until wages go up or Wall Street recovers.

Then, he hikes rates if inflation isn’t behaving.

Hardly a comforting response to those working for a living and getting squeezed by the high prices.

With elections coming, I anticipate the Congressional opposition to escalate.

2 Responses

  1. Yes, our exports are costs, imports benefits.

    Import prices are now rising after falling for many years.

    Much of what we import has high labor content, so higher import prices represents higher unit labor costs to us.

    I’ve always questioned why we are sending trade negotiators to China to try to force them to make us pay more for their products and give them all defacto pay increases (stronger yuan/weak dollar policy).

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