Monetary News Jan. 31 - Feb. 4

---

News
FRIDAY
Bernanke Denies That Fed Is Stoking Inflation
Federal Reserve Chairman Ben Bernanke rejected complaints by China and other developing economies that U.S. policies are driving up global food and energy prices, and instead pinned the blame on accelerating growth in emerging markets and their inadequate response.
Merkel, Sarkozy Call Euro Summit in March on Economy
German Chancellor Angela Merkel and French President Nicolas Sarkozy called a summit of euro-area leaders next month on economic competitiveness as they sought to bridge differences over how to end the region’s debt crisis.
The currency that just won't quit
The Swiss franc, one of the world's strongest currencies, has been on a tear in recent months, and is now flirting with a new all time high against the U.S. dollar.
Greater expectations?
Inflation is rising, but worries are overstated.
Parsing prices
Rising inflation is not as worrisome as it appears, at least for now.
ECB's Nowotny Lets `Cat Out of Bag' With 2012 Inflation Forecast
European Central Bank council member Ewald Nowotny may have explained why President Jean-Claude Trichet has pushed back expectations for higher interest rates -- by revealing the bank’s latest inflation forecast for 2012.
World Economic Forum at Davos: Still Standing
In the high-speed world, growing confidence has led to a striking willingness to admit to shortcomings in economic governance — the sort of admissions that only those who are optimistic about their long-term future make.

THURSDAY
Yuan must appreciate to curb inflation
It's been a remarkable recovery for China, but now the fast-growing economy is fighting runaway inflation, and experts say the country must allow its currency to appreciate to stay on course.

WEDNESDAY
Egypt and the growing problem of global inflation
When prices rise faster than economic growth, the outcome is damaging for any population, but especially for a young one like Egypt's. Unfortunately, there are worrying signs that stagflation is spreading around the world.

TUESDAY
Bernanke's biggest blunders
Tuesday marks the fifth anniversary of Ben Bernanke's taking the reins at the Federal Reserve, not that anyone's counting.
Currency War Emerges at Davos
A fight is looming between rich and poor countries over the value of the dollar and other key currencies, as governments use monetary tricks to boost their national recovery at the expense of other nations, political and business leaders warned Saturday.

MONDAY
Inflation in China May Limit U.S. Trade Deficit
Inflation is starting to slow China’s mighty export machine, as buyers from Western multinational companies balk at higher prices and have cut back their planned spring shipments across the Pacific.
Fed Hoards a Trillion in Treasurys
The Federal Reserve has passed yet another milestone on its journey into uncharted territory: Its average holdings of longer-term Treasurys have passed the $1 trillion mark.
Loneliest Man in Davos Foresees 2015 Bank Crisis While Global Elites Party
As politicians, executives and financiers networked at parties and panels last week in Davos, Switzerland, Barrie Wilkinson was in a nearby hotel, warning that a 2015 financial catastrophe may be looming.
China Is No White Knight in Europe's Debt Crisis: Iana Dreyer
China’s pledges to purchase Greek and Spanish bonds as well as statements of financial support for Portugal show trade and investment are at stake. After all, Europe is China’s premier export destination.
European Inflation Quickens to Two-Year High of 2.4%
Inflation in the euro region quickened to 2.4 percent from 2.2 percent in December, the European Union’s statistics office in Luxembourg said today in a preliminary estimate without providing a breakdown. That’s the fastest since October 2008 and exceeded the 2.3 percent median estimate of 37 economists in a Bloomberg News survey.
What bonds are saying about inflation
Like a dripping faucet filling up a sink, yields on U.S. Treasuries have been slowly rising for several months now -- raising concerns that inflation may be on the horizon.
Egypt Crisis Spurs Jump in Developing Money-Market Rates
Money-market rates in developing nations are increasing at the fastest pace since 2008 as central banks from China to Brazil lift borrowing costs and banks hoard cash on concern unrest in Egypt may destabilize the Middle East.

Economist Comments
FRIDAY
Fed Chairman Says Economy Closer to Self-sustaining Recovery
Federal Reserve Chairman Ben Bernanke defended the bank's controversial quantitative easing program on Thursday afternoon, saying it was delivering on its promise to shore up the nascent economic recovery.
Ben Benanke's Fatal Flaw and Our Modern-Day Currency War
When currency becomes more of a foreign policy tool than a monetary policy tool, this is when one can correctly characterize the movements as a currency war.
Fed's Dollar Press Triggering Massive Commodity Inflation
Listen to the podcast to see how money printing will impact US markets in months ahead.

WEDNESDAY
Lower Short Term Interest Rates Won't Solve Economic, Financial Market Problems
Here, an illustration of this with the history of one- and 10-year Treasury yields and the forward rate ratio between them.

TUESDAY
"Low" U.S. Inflation Is a Function of Clever Calculation
A frequent question posed to those who tilt toward the inflation side of the alleged inflation/deflation debate is that if inflation is such a problem, why isn't it registering in the consumer price index? The answer to this question lies in reports of pricing pressures around the world.

MONDAY
AAA Rating Tough to Defend as US Debt Soars
The failure of the ratings companies to identify the riskiness of real estate loans clearly contributed to the financial crisis.
Inflation and the Return of Rising Borrowing Costs in Europe
Inflation in PIIGS countries rose even faster than in core economies in Europe, and this may actually push business costs in PIIGS countries even higher.
Regression to the Mean: Economy Heading Toward Even Worse Recession
In its ill-fated attempt to get something for nothing the Fed is going to cause a currency crisis and a massive surge in global inflation.

Blogs
MONDAY
Misunderstanding Inflation through the Years
In fact, of course, price inflation was the natural result of a substantial increase in the money supply.
The Next Big Move for Precious Metals and the Dollar, Part 2
Gold and silver are nearing a short term resistance level and will find selling pressure in the coming days. The dollar on the other hand broke out of its falling wedge and could have a strong rally for two or three days.

Reports
MONDAY
Can China’s Currency Go Global?
Concerns that the yuan could replace the dollar as an international reserve currency are premature, however. To become a global financial superpower, China would have to relinquish control over capital outflows and the exchange rate Between the yuan and other major currencies. Chinese officials are unlikely to undertake such liberalization anytime soon.