QUOTE=Bob;290628]Oil hit 79.80 a barrel today. Nothing Ben does controls the price of oil. Oil drives food prices. The last time we had a Fed inflation fighter, the Prime went to 20, and everyone went to the unemployment line. OPEC has long outlasted Volcker.http://www.bloomberg.com/apps/news?pid=20601109&sid=aWSBqmhwbCFw&refer=home[/QUOTE]
Paul Volcker stepped up and did what needed to be done at the time. America then (as it is now) was way out of control--he took charge and took responsibility to fix the system...whiners be damned!
As for the "oil scare" back in the 70's, we Americans cracked down and went on fuel rationing (odd & even number plates for gas fillups); bought fuel-efficient cars; turned down/up the thermostats in our homes; cut off hot water at public/government/corporation restrooms; and took out every-other overhead light to save on energy. In other words we came together and stuck our collective thumbs in the eye of the oil-producers. That would never happen again in this day-and-age with our SUV-lovin', McMansion-livin', me-me-me generation.
But it's not only oil that drives food prices. Wages are the #1 expense on the corporate balance sheet--and they've been stagnant for years and years. When inflation takes hold, workers demand more money, which in turn causes the corporation to pass those costs on to the customer and raises prices, which in turn creates more inflation. Another thing that creates inflation is more money chasing after fewer goods. So if the Fed drops the funds rate and lets more money flow into the system, that will add to the inflation problem.
In his heart-of-hearts Ben knows he shouldn't cave to the whims of Wall Street and lower the interest rates because it will only do more harm to the U.S. economic system in the long-run. Even worse, (according to your article) he's taken to employing Quants to essentially "Mark to Model" the outcome of any decision made by the FOMC (so they can have something else to blame for a bad decision?). This type of "Mark to Model" quantitative analysis is what heralded the downfall of the toxic waste Mortgage Backed Securities. Using computer models to predict "what might happen" to the securities if situation "A" followed situation "B" didn't take into account the fraud and manipulation going on inside the subprime mortgage market--and neither can the models prepared by Bernake's Quants predict the outcome of an ill-timed Fed funds cut in a globalized marketplace.
It's gotten to the point that the US is strung-out on credit and just needs a little "liquidity fix"....and then another....and another. The next thing you know we'll be shaving our head and "going commando" out on the town. But I digress--if there is a cut, I recommend that everyone stock up on Parmigiano-Reggiano cheese next week....by Christmas it may be topping $20+ a pound.
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Paul Volcker stepped up and did what needed to be done at the time. America then (as it is now) was way out of control--he took charge and took responsibility to fix the system...whiners be damned!
As for the "oil scare" back in the 70's, we Americans cracked down and went on fuel rationing (odd & even number plates for gas fillups); bought fuel-efficient cars; turned down/up the thermostats in our homes; cut off hot water at public/government/corporation restrooms; and took out every-other overhead light to save on energy. In other words we came together and stuck our collective thumbs in the eye of the oil-producers. That would never happen again in this day-and-age with our SUV-lovin', McMansion-livin', me-me-me generation.
But it's not only oil that drives food prices. Wages are the #1 expense on the corporate balance sheet--and they've been stagnant for years and years. When inflation takes hold, workers demand more money, which in turn causes the corporation to pass those costs on to the customer and raises prices, which in turn creates more inflation. Another thing that creates inflation is more money chasing after fewer goods. So if the Fed drops the funds rate and lets more money flow into the system, that will add to the inflation problem.
In his heart-of-hearts Ben knows he shouldn't cave to the whims of Wall Street and lower the interest rates because it will only do more harm to the U.S. economic system in the long-run. Even worse, (according to your article) he's taken to employing Quants to essentially "Mark to Model" the outcome of any decision made by the FOMC (so they can have something else to blame for a bad decision?). This type of "Mark to Model" quantitative analysis is what heralded the downfall of the toxic waste Mortgage Backed Securities. Using computer models to predict "what might happen" to the securities if situation "A" followed situation "B" didn't take into account the fraud and manipulation going on inside the subprime mortgage market--and neither can the models prepared by Bernake's Quants predict the outcome of an ill-timed Fed funds cut in a globalized marketplace.
It's gotten to the point that the US is strung-out on credit and just needs a little "liquidity fix"....and then another....and another. The next thing you know we'll be shaving our head and "going commando" out on the town. But I digress--if there is a cut, I recommend that everyone stock up on Parmigiano-Reggiano cheese next week....by Christmas it may be topping $20+ a pound.
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Romano cheese here only! 
:boxing: 
