This afternoon I participated in a conference call where a senior Treasury official provided background information on Secretary Geithner’s goals for his trip to the G-20 Meeting of Finance Ministers and Central Bank Governors, in Paris, France on February 18 and 19, 2011.
The Treasury official stated that among Geithner's goals was discussion of commodity price inflation. The official couched the planned discussion in terms of inflation in emerging countries, but I can't help to think that they are also very well aware of the price inflation of commodities in terms of the dollar.
Further, Treasury is trying to spin the inflation in terms of supply and demand factors outside of the role of central bank money printing, but as the inflation heats up that is going to be much more difficult to do.
So expect some murmurings out of the G-20 about commodity price inflation in emerging markets, but that is as far as they will go. The inflation is obviously much too strong for them to deny, but they will try to paint it as an isolated event. When inflation bursts out all over the place by mid-2011, I have no idea how they will spin it, but keep an eye on Krugman. He seems to be Bernanke's point man when fairy tales need to be spun.
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