US Monetary Policy is Responsible for Price Rises

Editorial, The Wall Street Journal | May 23, 2008

US Federal Reserve officials continue to insist that recent price increases have almost nothing to do with monetary policy. ++ Yet their claim that only global supply and demand for corn and oil are responsible for the soaring of oil and food prices is simply wrong. ++ Oil on global markets is denominated in dollars. ++ When speculators anticipate that the greenback’s value will fall further, oil sellers demand more dollars for their product. ++ The Fed miscalculation which caused current inflation could have a much higher cost in the future.