Robbing Peter to Pay Paul Wall Street
“THERE it is.”
–“30 Rock” character Liz Lemon, upon identifying the inevitable flaw in each new, too-good-to-be-true suitor.
Want a culprit for now-rising prices at the grocery store and gas pump?
No, it’s not because of worldwide droughts and floods — headline-grabbing shortages in places like the Soviet Union are roughly offset by bumper crops elsewhere.
And gas prices aren’t going up because consumption is climbing (it’s been flat).
So, what’s responsible?
Many observers — myself included — lay the blame at the doorstep of The Federal Reserve and its chief patron and beneficiary, Wall Street.
Son of ZIRP
Almost a decade ago, the Federal Reserve dropped interest rates through the floor to stimulate a then-moribund economy.
All that free money eventually flooded the housing market, and the rest — as they say — is history (if only; the housing market hangover continues today in most parts of the country).
This time around, following the 2008 financial melt-down, zero percent interest rates (“ZIRP”) intended to revive Wall Street instead sent gushers of money into all manner of commodities.
So, oil, platinum, gold, silver, wheat, soy beans, fertilizer — you name it — have all skyrocketed the last two-plus years.
Fast forward to January, 2011, and what you’re seeing at the gas pump and grocery store is the natural, inexorable consequence.
