Thats the truth, every time the fed talks about inflation being low, commodities soar to new highs. Hum whats the real agenda here.
If you believe any Fed speak then I hope you didn't believe this doozy from our Treasury Secretary Paulson on 12/01/2006: "a strong dollar is clearly in our nation's interest, and I feel very good today about the strength of the U.S. economy."
Yes, he's quite believable. Especially when he speaks in that voice of his - it sounds like a homeless bum liquored up on Mad Dog 2020
You really have very little knowledge on this topic because you continue to believe that the FED has been dramatically easing, even though Fed Funds continue to trade at a full point above the yield of the 2-year treasury note. Prior to the 3/4 point rate cut in mid-January, Fed Funds were trading nearly 2 full points above the yield of the 2-year Treasury Note. This is CLEARLY not a dramatic easing policy. It has been anything but! Have you heard the FED conduct a "Coupon-Pass" or "Bill-Pass" lately? Nadda.
And let the commercial banking system and the financing of Corporate America fail? Please tell me that you are not that dumb.
Ok, replace "dramatic" with "faster than they should". The statement had a word you didn't agree with, and the rest is my view and my opinion. But it still doesn't change the fact that oil took off on the very day (moment) that the Fed surprised everyone in late August with a 50bps - which was what this argument was about in the first place. You've done a good job, almost had me redirected. Had nothing to do with China. The run on commodities is not a China thing either. Oh sure, China is a large part of it. But the biggest aspect is inflation and speculative hedging against inflation.
You seem to naively assert that raising interest rates will bring down $14 soybeans . . . Think again. Do you honestly think that rates at a certain # will cut Soybean demand from overseas buyers? Get real.
Though I know the question wasn't directed to me, I'll answer it: "Partly". Less as much with Soybeans, but I do believe that the Fed's indication of a desire to raise (or even maintain at this point) rates would go a long way towards speculative purchasing of commodities. the fact that the Fed has indicated it is "FULL ON" with the money spigot without any inclination to pause for tea is a large part of the problem.
Only way to fix it, is SUPPORT THE $USD By higher interest rates. History does repeat - Volker may get the call !! Let the market adjust.