From Volume 38, Issue 16 of EIR Online, Published Apr. 22, 2011

U.S. Economic/Financial News

Hyperinflation Inseparable from Fed's Money Printing

April 10 (EIRNS)—Kansas City Federal Reserve President Thomas Hoenig on April 1 charged that Fed Chairman Ben Bernanke's "Qualitative Easing II" (QEII) money printing is causing commodity prices to surge, something Bernanke repeatedly denied in Congressional hearings.

A chart released by Bloomberg News on April 7, tracking the Journal of Commerce Commodity Index, shows that from a low point in January 2009, the Index has risen without interruption precisely since the Fed's launching at that time of multitrillion-dollar purchases of mortgage-backed securities (MBSs) and Treasuries. This was so-called "QEI." The mechanism is that the Fed buys large masses of securities of varying toxicity from the banks; the banks park the proceeds in excess reserves at the Fed, and pour them into commodity futures/derivatives funds, exchange-traded funds, emerging market funds, loans to hedge funds speculating in commodities, etc. The only interruption in the surge came in late Summer 2010, after the Fed had topped off this buying, and before it began QEII. The Index then rose steadily again from August 2010 until now.

The Bloomberg chart shows the Fed's money printing and the commodity hyperinflation forming virtually identical curves over the two years. The St. Louis Federal Reserve bank has just released figures showing the Fed increasing the U.S. money supply by 10% annually, the pace doubling since the beginning of 2011—even while unpayable real estate, consumer, and commercial debt is continuing to be written off.

Overall, across the entire 18-commodity range, prices have risen by an average of 150% in two years since March 2009, destroying livelihoods and increasing political disruptions in many nations. The inflationary rise has not yet become geometric, but it is accelerating, with most commodities having risen 20-30% in just the first quarter of 2011: oil at $112.79 a barrel, up 23% in the quarter; silver up 31%; corn at $7.68 a bushel, up 22%; wheat up 21%; copper up 31%.

Number of Employed Americans Hit Record Lows

April 15 (EIRNS)—USA Today reported yesterday that the percentage of Americans working is now the lowest since 1983: Only 45.4% of all Americans had jobs in 2010, the lowest rate since 1983, and down from a peak of 49.3% in 2000. Using a different measurement, the active labor force, just 66.8% of men had jobs, the lowest on record.

The portion of people ages 16-24 in the labor market is at the lowest level since the government began keeping track in 1948, falling from 66% in 2000, to 55% this year. There are 17 million in that age group who are employed, the fewest since 1971, when the population was much smaller.

People in their 50s, 60s, and 70s are staying employed longer than at any previous time. For example, 55% of people ages 60-64 were in the labor market during the first 11 months of 2010, up from 47% for the same period in 2000. "Most people work longer because they have to," says Carl Van Horn, director of the Heldrich Center of Workforce Development at Rutgers University. "Many can't afford to drop out of the labor market without severe financial implications."

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