Dollar or Gold? Sarah Palin and Robert Zoellick Debate MOnetery Policy

Palin's Dollar, Zoellick's Gold

An unlikely pair elevate the monetary policy debate.

Debate would be more and more rushed about monetery policy which is dollar or gold?

It would be hard to find two more unlikely intellectual comrades than Robert Zoellick, the World Bank technocrat, and Sarah Palin, the populist conservative politician. But in separate interventions yesterday, the pair roiled the global monetary debate in complementary and timely fashion.

The former Alaskan Governor showed sound political and economic instincts by inveighing forcefully against the Federal Reserve's latest round of quantitative easing. According to the prepared text of remarks that she released to National Review online, Mrs. Palin also exhibited a more sophisticated knowledge of monetary policy than any major Republican this side of Wisconsin Representative Paul Ryan.

Stressing the risks of Fed "pump priming," Mrs. Palin zeroed in on the connection between a "weak dollar—a direct result of the Fed's decision to dump more dollars onto the market"—and rising oil and food prices. She also noted the rising world alarm about the Fed's actions, which by now includes blunt comments by Germany, Brazil, China and most of Asia, among many others.

"We don't want temporary, artificial economic growth brought at the expense of permanently higher inflation which will erode the value of our incomes and our savings," the former GOP Vice Presidential nominee said. "We want a stable dollar combined with real economic reform. It's the only way we can get our economy back on the right track."

Mrs. Palin's remarks may have the beneficial effect of bringing the dollar back to the center of the American political debate, not to mention of the GOP economic platform. Republican economic reformers of the 1970s and 1980s—especially Ronald Reagan and Jack Kemp—understood the importance of stable money to U.S. prosperity.

On the other hand, the Bush Administration was clueless. Its succession of Treasury Secretaries promoted dollar devaluation little different from that of the current Administration, while the White House ignored or applauded an over-easy Fed policy that created the credit boom and housing bubble that led to financial panic.

Editorial page editor Paul Gigot scores round one for the former Alaskan Governor. Also, Columnist Daniel Henninger analyzes the Speaker's bizarre reaction to an electoral shellacking. Allysia Finley responds to reader comments about the miserable fiscal state of the Golden State.

Misguided monetary policy can ruin an Administration as thoroughly as higher taxes and destructive regulation, and the new GOP majority in the House and especially the next GOP President need to be alert to the dangers. Mrs. Palin is way ahead of her potential Presidential competitors on this policy point, and she shows a talent for putting a technical subject in language that average Americans can understand.

Which brings us to Mr. Zoellick, who exceeded even Mrs. Palin's daring yesterday by mentioning the word "gold" in the orthodox Keynesian company of the Financial Times. This is like mentioning the name "Palin" in the Princeton faculty lounge.

Mr. Zoellick, who worked at the Treasury under James Baker in the 1980s, laid out an agenda for a new global monetary regime to reduce currency turmoil and spur growth: "This new system is likely to need to involve the dollar, the euro, the yen, the pound and a renminbi that moves toward internalization and then an open capital account," he wrote, in an echo of what we've been saying for some time.

And here's Mr. Zoellick's sound-money kicker: "The system should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values. Although textbooks may view gold as the old money, markets are using gold as an alternative monetary asset today." Mr. Zoellick's last observation will not be news to investors, who have traded gold up to $1,400 an ounce, its highest level in real terms since the 1970s, as a hedge against the risk of future inflation.

However, his point will shock many of the world's financial policy makers, who still think of gold as a barbarous relic rather than as an important price signal. Lest they faint in the halls of the International Monetary Fund, we don't think Mr. Zoellick is calling for a return to a full-fledged gold standard. His nonetheless useful point is that a system of global monetary cooperation needs a North Star to judge when it is running off course. The Bretton Woods accord used gold as such a reference until the U.S. failed to heed its discipline in the late 1960s and in 1971 revoked the pledge to sell other central banks gold at $35 an ounce.

One big problem in the world economy today is the frequent and sharp movement in exchange rates, especially between the euro and dollar. This distorts trade and investment flows and leads to a misallocation of capital and trade tensions. A second and related problem is the desire of the Obama Administration and Federal Reserve Chairman Ben Bernanke to devalue the dollar to boost exports as a way to compensate for the failed spending stimulus.

As recently as this week in India, Mr. Obama said that "We can't continue situations where some countries maintain massive [trade] surpluses, other countries have massive deficits and never is there an adjustment with respect to currency that would lead to a more balanced growth pattern."

If this isn't a plea for a weaker dollar in the name of balancing trade flows, what is it? The world knows the Fed can always win such a currency race to the bottom in the short run because it can print an unlimited supply of dollars. But the risks of currency war and economic instability are enormous.


source:http://online.wsj.com/article/SB10001424052748703514904575602231815453378.html

Secret Walmart Survey Shows Inflation Already Here

CNBC.com | November 11, 2010 | 02:59 PM EST

Inflation is coming, in this report WalMart study has prove that statement. Because this inflation maybe the value of money will surge and the rate maybe up force that slump. Let's talk about it and the report says...... Here they are....

There might not have been a second round of quantitative easing, if Federal Reserve Chairman Ben Bernanke shopped at Walmart.

A new pricing survey of products sold at the world’s largest retailer showed a 0.6 percent price increase in just the last two months, according to MKM Partners. At that rate, prices would be close to four percent higher a year from now, double the Fed’s mandate.

The “inaugural price survey shows a small, but meaningful increase on an 86-item grocery basket,” said Patrick McKeever, MKM Partners analyst, in a note. Most of the items McKeever chose to track were every day items like food and detergent and made by national brands.

On November 3, the Fed announced its much-anticipated purchase of $600 billion in Treasury securities. An effort to keep market rates low since the central bank’s benchmark rate is already at zero. The Federal Open Market Committee’s statement said, “Currently, the unemployment rate is elevated, and measures of underlying inflation are somewhat low, relative to levels that the Committee judges to be consistent, over the longer run, with its dual mandate.”

But since that statement, interest rates have actually gone up, backfiring on a Fed chief who wants his quantitative easing to spark inflation of 2 percent annually. A moderate amount of inflation would be considered good for the economy. The problem is that inflation is already running well above a healthy level, investors said, Bernanke is just not looking in the right place, like a Walmart.

“I suspect that when the Chairman thinks about reflation he has a difficult time seeing any other asset besides real estate,” said Jim Iuorio of TJM Institutional Services. “Somehow the Fed thinks that if its not ‘wage driven’ inflation that it is somehow unimportant. It’s not unimportant to people who see everything they own (homes) going down in value and everything they need (food and energy) going up in price.”

Next week, the government is expected to say its official measure of inflation, the Consumer Price Index, increased at a 0.3 percent annual rate, according to economists’ consensus estimate. Core CPI, excluding food and energy, is expected to climb just 0.1 percent.

The biggest dollar increase in McKeever’s survey was on a jug of Tide Original laundry detergent, manufactured by Procter & Gamble [ PG 64.33  -0.03 (-0.05%) ]. Both P&G and Kimberly-Clark [ KMB 62.02  -0.13 (-0.21%) ] gave tentative forecasts for this quarter on concern they won’t be able to pass rising input costs on to the consumer. They may have no choice.

Prices of cotton, silver wheat, soybeans, corn are all up big this year. Cotton futures are up the most, climbing 90 percent so far in 2010. The price of silver is up 63 percent.

The purpose of McKeever’s note was actually not to be a commentary on Fed policy. The retail analyst is just trying to find out if Walmart is subtlety-increasing prices without decreasing foot traffic. A process he would deem bullish the stock.

“If the pricing dynamic is shifting, as our survey suggests, this would lend some upside bias to our sales and earnings expectations,” said McKeever.

Bernanke keeping interest rates artificially low is sparking outrage among central bank chiefs around the world, who feel the U.S. is essentially exporting inflation.

China’s CPI surged 4.4% in October, according to figures released Thursday, higher than economists’ expected and up from a 3.6 percent annual reading in the month prior.

Said EmergingMoney.com Founder Tim Seymour, “Bernanke definitely must not shop at WalMart in China.”

For the best market insight, catch 'Fast Money' each night at 5pm ET, and the ‘Halftime Report’ each afternoon at 12:30 ET on CNBC. 

McDonald's and PepsiCo to help write UK health policy (wew)

Department of Health putting fast food companies at heart of policy on obesity, alcohol and diet-related disease

the Department of Health is definitely putting the fast meal companies McDonald's and KFC and processed drink and food manufacturers such as PepsiCo, Kellogg's, Unilever, Mars and Diageo in the centre of writing government protection plan on obesity, alcohol in addition to diet-related disease, the protector has learned.

In an overhaul of public wellbeing, said by campaign groups to be the same as handing smoking policy onto the tobacco industry, health secretary Andrew Lansley has developed five "responsibility deal" companies with business, co-chaired simply by ministers, to come " up " with policies. Some these are expected to be included in the public health white paper due inside the next month.

The groups are dominated by nutrition and alcohol industry people, who have been invited to suggest measures to be able to tackle public health downturn. Working alongside them tend to be public interest health along with consumer groups including which?,Cancer Research UK along with the Faculty of Public health. The alcohol responsibility offer network is chaired by head of the lobby team the Wine and heart Trade Association. The food network to be able to tackle diet and illnesses includes processed food manufacturers, fast food companies, and also Compass, the catering company famously pilloried by Jamie Oliver because of its school menus of egypr twizzlers. The food deal's sub-group at calories is chaired by means of PepsiCo, owner of Walkers crisps.

the class leading supermarkets are an each strong presence, while the responsibility deal's training group is chaired by Fitness Industry Association, which is the lobby group intended for private gyms and fitness instructors.

In early meetings, these commercial partners happen to be invited to draft priorities and identify barriers, including EU legislation, that they would like removed. They have been assured by Lansley that he desires to explore voluntary not regulating approaches, and to service them in removing hurdles. Using the pricing connected with food or alcohol to change consumption continues to be ruled out. One group was told the fact that health department did not desire to lead, but rather hear through its members what really should be done.

Professor Sir Ian Gilmore, the best liver specialist and until recently president on the Royal College of professionals, said he was very concerned by emphasis on voluntary partnerships with industry. A member belonging to the alcohol responsibility deal community, Gilmore said he had decided to co-operate, but he doubted whether there will probably be "a meaningful convergence concerning the interests of business and public health considering that priority of the drinks industry was in making money for shareholders although public health demanded a cut in consumption".

he / she said: "On alcohol there exists undoubtedly a need pertaining to regulation on price, availability and marketing and there's a risk that discussions shall be deflected away from regulation that may very well be effective but would have an effect on sales. On food labelling we certainly have listened too much into the supermarkets rather than looking for traffic lights [warnings] which usually health experts recommend. " Employers are being asked to take with more responsibility for employees within a fourth health at perform deal. The fifth network is charged with modifying behaviour, and is chaired by National Heart Forum. This group is likely to be working with the innovative Cabinet Office behavioural insight unit, which is exploring options for making people change their own behaviour without new guidelines.

Lansley's public health reforms are seen as a test case for wider Conservative coverage on replacing state treatment with private and company action.

While public interest groups are doing drawing up the opportunities, many have argued of which robust regulation is needed to manage junk food and booze misuse.

The Faculty associated with Public Health, represented on some the deal networks, has feedback a ban on trans weight and minimum alcohol pricing. Professor Lindsey Davies, FPH us president, said: "We are hopeful that engaging with all the food industry will lead to changes in the quality and healthiness belonging to the products we and your children eat. It can be done to make progress on issues for instance salt reduction through voluntary agreements, and we're keeping a great open mind until all of us see what comes right out the meetings, but we take into account that there is continue to a role for regulation. "

Responding to criticism this industry was too prominent while in the plans, the Department involving Health said: "We are constantly in touch with expert bodies, including those within the public health field, to help you inform all our work. For the forthcoming criminal court health white paper we've engaged an array of people, as we can also be doing to help people develop the responsibility package drawn from business, the actual voluntary sector, other non-governmental companies, local government, as well as public health body frames. A diverse range of experts will also be involved. "

He added that this government wanted to develop public health through voluntary agreements with business and also other partners, rather than through rules or top-down lectures as it believed this approach will be far more effective plus ambitious than previous work.

An over-arching board, chaired through Lansley, has been create to oversee the work from the five responsibility deal systems, with representatives of local government along with a regional health director – but it surely too is dominated by food, alcohol, advertising along with retail industries. Gilmore feedback a better balance of commercial interests and separate experts on it.

Other experts have expressed concern at Lansley's tactic. Professor Tim Lang, a member from the government's advisory committee on obesity, doubted the drink and food industry's ability to get a grip of itself. "In public well being, the track record of industry will never be good. Obesity is the systemic problem, and industry is locked into service plan its own narrow pastimes, " said Lang.

"I am deeply troubled to get sent signals from your secretary of state concerning working 'with business' and the any action has got to be soft 'nudge' action. "

Jeanette Longfield, head in the food campaign group sustain, said: "This is roughly the same as putting the tobacco industry responsible for smoke-free spaces. We know this 'let's all get across the table approach' doesn't work, because we've all tried using it before, including the past Conservative government. This just isn't 'big society', it's significant business. ".