Understanding Federal Reserve Inflation

The constant rate cuts and geopolitical jitters have sent gold skyrocketing. Since August 2007, gold has gone from $650 per ounce to $887, a whopping $237 in just 5 months. If that is not an indictment of the Federal Reserve and their “loosey-goosey” monetary policy; then what is? According to the Wall Street Journal “gold and oil have run almost in perfect tandem. The price of gold has risen 239% since 2001, while the price of oil has risen 267%. That means if the dollar had remained as ‘good as gold’ since 2001, oil today would be selling at about $30 a barrel, not $99.” (WSJ, 1/4/08)

"If the Fed’s “low interest” smelling salts don’t revive the comatose American consumer – and get the cash registers at Target and Billy McHales ringing again – the world will face a global slowdown. That’s why the Fed Funds rate will probably get hacked by 50 basis points by month’s end and Comrade Bush’s economic team will concoct a fiscal bailout plan worthy of Fidel Castro."