Reinko

Will the World's Central Banks Successfully Fight Inflation?

The main problem is that the central bankers do not understand the nature of the present problems; Alan Greenspan never understood why throwing so much money on the markets in defense of the 1% rate threshold is very dangerous in the long run.
(Proof that he did not understand: That conondrum thing of Alan...)

Right now ECB Jean Claude Trichet also does not have much clue either because just a few days ago he stated that European inflation was 'anchored'. (Anchored inflation means that workers cannot get higher wages to compensate for it).

Well in my country Holland just the day before yesterday the latest wage round with the unions were closed and all got above inflation wage increases. (This on the back of a record number of strikes in all parts of society, even the police.)

So here in Holland inflation is embedded: That means workers anticipate on future inflation expectations.

And today brought the news that in the 15 nation Euro zone wages will grow 3.3% on average, that still is below inflation expectation but in Spain the shops get empty just on the back of high fuel prices. So likely most European workers do not like a Trichet anchor around their neck...

Source:

www.bloomberg.com/apps...

And that guy Bernanke? Don't make me puke, he is one of those who induce a 'cash is trash' mentality so funds like pension invest less and less for the long haul and act more and more as day traders on food and commodity markets. There are even Swiss banks who advertise with these kind of new products, they call it 'Thinking new perspectives'.