From Volume 38, Issue 1 of EIR Online, Published Jan. 7, 2011

Global Economic News

Hyperinflationary Process Proceeds Globally

Dec. 29 (EIRNS)—From heating oil, to metals and food commodities, speculation is proceeding at hyperinflationary rates, as bailout funds course into international banks, with the Federal Reserve in the lead as lender-of-last-resort. In the midst of this unrestricted flow, with no curbs on speculation, and low borrowing rates, commodity futures trading is going wild. Yet the line continues, put forward by Fed chairman Ben Bernanke, that, the printing presses must roll for "quantitative easing 3," in order to counter the "lack of inflation"!

A snapshot view as of the last week of the year, shows the hyperinflationary process underway. Overall, there was a 15% increase in the Commodities Research Board (CRB) Index for the year, after a 10% drop in the first six months. Copper prices hit a record high this week. Soy and oil hit a two-year peak, with oil breaking $91 a barrel. Corn and wheat futures have jumped more than 40% over 2010. Cotton has jumped 35% just since September. Gold is above $1,400 an ounce. U.S. heating oil futures (January delivery) jumped up 9% during the month of December alone, ending up 19% for the year. Other basic commodities are likewise being bid up.

Inside the Fed, there are a few voices of "concern," but no one at all is talking about the implications of the blowout of the European Monetary Union. One well-placed source in the Fed system reported that no one will take up the implications of the nearly unlimited flow of Fed funds. The 14-day, 1-month, and 3-month credit lines, which are being opened to the banks, with no ceiling on what is going out, are not being repaid. They are simply rolled over, again and again. The European Central Bank (ECB), he said, is at the limit politically of the bailout funds it can issue, which is far less than what is needed, so it all comes back to the Fed.

In Scandinavia, there are a few expressions of dissent against London's bailout policy. The Swedish Central Bank has raised the repo rate four times since July, even though official inflation is below the bank's 2% target. And Finland's Nordic Investment Bank wrote in its Dec. 17 newsletter that central banks have worsened the problem of asset price bubbles by keeping interest rates low: "Rates are low and the central banks are 'printing money' while virtually all prices, except the consumer prices in industrial countries [through statistical tricks—ed.], are increasing rapidly."

Today, in Germany, official statistics countered Bernanke's fraud. The Federal Destatis reported that consumer prices rose by 1% just since October in Germany. By Eurostat methods of calculation, the rise was 1.2%, two-thirds of it accounted for by a 4.5% rise in prices for motor fuel and heating oil. In New England, consumer prices for heating oil have risen each week of December, with two more months of Winter ahead. Another example of Bernanke's "lack of inflation."

Support for D-Mark in Germany Keeps Growing

Dec. 27 (EIRNS)—The more that prominent persons in German politics, banking, and university life come out in favor of the euro and against a return to the deutschemark, the more they are contributing to what they want to prevent: making the return to the national currency even more of an issue of public debate.

Indicative is a new opinion poll, which Germany's leading mass daily Bildzeitung published this morning, according to which, 51% of Germans are "not happy" with the euro, 67% are worried about tits stability, and 77% even say they have had no benefit from the introduction of the euro 10 years ago. Nearly half, 49%, think the d-mark would be better for the German economy than the euro, whereas only 33% oppose the d-mark.

And, if there were a referendum on the euro now, 60% would vote against, and only 30% for. Even more interesting: 35% said they would or might vote for a new party that made the d-mark return the top issue of its campaigning. (The Civil Rights Movement Solidarity (BüSo), the party of the LaRouche movement in Germany, promptly informed Bildzeitung that the "new" party is already here—the BüSo.)

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