True, the recent and significant rise in commodities prices is troubling, but its effects in 2011 in the U.S. will probably be "a ripple," although food prices may have contributed significantly to fomenting revolution in Tunisia and Egypt. Lately commodities prices have very little to do with Obama or the U.S. period, (growing U.S. demand for biofuels excepted), and much more to do with demand in China and speculators reacting to droughts in Australia, fires in Russia, political upheavals in the Mideast, etc.
What really bothers me about these inflation scaredycats is that they forget about real U.S. workers who have no job, or a part-time job, or a job that pays much less than their previous one, although their basic needs haven't decreased. A rise in food prices of 1-2 percent is unwelcome but pales in comparison to a 20-100 percent cut in monthly income. In the West, inflation is the bogeyman of the comfortable.
And *macroeconomics 101 tells us that an economy operating way below capacity with large unemployment cannot have high inflation. In fact, just a few months ago the Fed was more worried about deflation, which is bad for several reasons.
So I file all this inflation talk away in the "Obama's going to take away your guns" category. It's impossible to refute because it's pure speculation about some future event that probably won't happen, but since we live in the present I can't say the nutjobs are definitely wrong. (Although they are definitely wrong.)
* For us to have significant inflation right now, we'd have to have a leftward shift in the Aggregate Supply curve, meaning business costs would be rising faster than productivity. In fact, U.S. annual average productivity (output per worker per hour) increased 3.6 percent from 2009 to 2010, according to the Bureau of Labor Statistics; and wage increases were about 1.5 percent September 2009 on September 2010 vs. a 1.1 percent increase in consumer prices, hardly Zimbabwe-type increases.
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