The Fed keeps shoving its head deeper into the sand, hoping this inflation problem will go away. We get a bunch of speeches about how policymakers are "watching inflation closely."
But when it comes down to doing anything about it, the policymakers fold. Actually, they do something worse than that - they keep cutting interest rates even lower, driving real rates more deeply into negative territory.
Is it any wonder, then, that crude oil hit a fresh, all-time high of $115 a barrel this week? Or that the prices of all kinds of commodities have gone through the roof? Or that the dollar has been falling like a rock?
It's not just strong demand. It's not just strong overseas economic growth. It's the fact that nominal rates are much lower here than elsewhere, and that real rates are hugely negative.
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