Friday, July 4, 2008

Trichet On The Facts Of Life

Following a 25 basis point hike in interest rates, ECB president Jean Claude Trichet told reporters at a news conference that rising global prices might mean an unavoidable reduction in euro-zone living standards: “The shift in relative prices and the related transfer of income from commodity-importing countries to commodity-exporting countries have to be accepted.”

Certainly, what goes for the EU, also applies to the United States to an even greater degree, since inflation and currency depreciation are an even more significant problem in the U.S.

Those who are getting their hands on new dollars first will see their standard of living climb relative to those who receive new dollars later on in the new dollar timeline.

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