One
very good reason for the Fed to hold off on QE3 is that QE2 seemed to
have the unintended consequence of boosting food and fuel prices, which
depressed consumers’ purchasing power and spending. The terrible drought
in the US is pushing grain prices up to record highs, while gasoline
prices are rebounding as tensions mount between Israel and Iran. In
other words, real incomes are about to get hit again. There is nothing
the Fed can do about it other than to make it worse.
The
drought in the US is quickly turning into a major disaster. I may have
to lower my forecast for GDP for the second half of the year if it
doesn’t abate soon. Yesterday, the US Agriculture Department added 218
counties in a dozen states as disaster areas. That brings this year's
total to 1,584 in 32 states, more than 90% of them because of the
drought. More than half of US counties now are classified by the federal
government as natural disaster areas mostly because of the drought. ...MORE
*I have a problem addressing someone who didn't attend medical school as Dr.
I may have been influenced by Great Aunt Bernice who figured if you couldn't set a kids broken arm you were pretty much useless and the most she would grant you was "Blah blah, PhD"
She may have been biased by her M.D. thingy.
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