Why the Fed can’t control inflation


Two weeks ago the Times Magazine did a profile of current fed chairman Bernanke, which said that he believes that the primary way to control the economy is through sound monetary policy.

But I couldn’t help but think, well… what about war? What about dwindling resources?

Speaking of dwindling resources, here’s the reason we’re about to enter a nasty bout of stagflation — that’s recession plus inflation, the worst kind of economic nastiness an economy can experience:

food price index

And why’s food so expensive? Well, there’s the biofuels issue — there’s now a competition on between our cars and our stomachs, and both are after the same feedstock.

Another reason is that it’s possible we’re approaching what might be described as “peak food.” That is, globally, we are beginning to bump up against the limits of the planet’s carrying capacity. Really, for real this time.

Here’s how the Christian Science Monitor characterizes it:

Fuse on the ‘population bomb’ has been relit

Prospects for stabilizing the world’s soaring population have taken a blow. This development, if not reversed, will have huge economic, environmental, and political impacts on most people alive today.

Two years ago, the United Nations projected that the number of people on this planet would reach 8.9 billion by 2050. In March, the UN Population Division revised that projection to 9.2 billion.

Here’s a prediction: the long expansion of the human population since the last ice age will come to an end this century — checked, most likely as a result of disease and resource scarcity. After all, that’s how all other animal populations are checked — why should we be any different?

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