Saturday, March 29, 2008

Middle East and Asian Prices

"Even as it enriches Arab rulers, the recent oil-price boom is helping to fuel an extraordinary rise in the cost of food and other basic goods that is squeezing this region's middle class and setting off strikes, demonstrations and occasional riots from Morocco to the Persian Gulf. Here in Jordan, the cost of maintaining subsidies amid the surge in prices forced the government to remove almost all the subsidies this month, sending the prices of some fuels up 76% overnight. In a devastating domino effect, the cost of basic foods like eggs, potatoes and cucumbers doubled or more. In Saudi Arabia, where inflation had been virtually zero for a decade, it recently reached a level of 6.5 percent, though unofficial estimates put it much higher", Houston Chronicle, 25 February 2008.

"The administration of Lee Myung-bak, South Korea's new president, tamped down a potential conflict with the Bank of Korea by declaring that the country's top economic priority is fighting inflation. In a joint interview with four newspapers over the weekend, Mr. Lee said restraining inflation is the 'most urgent policy'," WSJ, 25 March 2008.

The Fed exports inflation all over the world. No official statistic anywhere is above suspicion. Sooner or later, the victims of Fed-sponsored inflation will pull the plug on the dollar.

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