Tuesday, March 1, 2011

Are they talking to each other...

...or past each other?

Careless whispers?: Treasury Sec. Timothy Geithner (left) and Federal Reserve Chairman Ben Bernanke.

Of course, that was before American gas pumps started ringing-up the gallons at an even faster rate than had been experienced in sometime. Now, almost a week after Geithner's “expert” prediction, worries over inflation and a backsliding economy are rising along with the average price-per-gallon cost of gasoline (which threatens to top $5, soon).

Contradicting Sec. Geithner today was Federal Reserve Chairman Ben Bernanke, who told Congress that a prolonged rise in oil prices would pose a danger to the U.S. economy. “The most likely outcome is that the recent rise in commodity prices will lead to, at most, a temporary and relatively modest increase in U.S. consumer price inflation," Bernanke said.

According to a story in the Los Angeles Times, however, “If gasoline prices rise to $3.75 a gallon and stay there for a year, it could mitigate the benefit of the Social Security tax cut, economists said. The economy would still grow, but it wouldn't get a boost from people spending more on goods and services. If gasoline prices went as high as $5 a gallon, spending cuts by consumers and businesses could push the U.S. economy into a recession, analysts say. (Food prices in January rose at the fastest since the fall of 2008.)”

Of course, Mr. Geithner is right. I mean, I’m sure this is just a hiccup. Right? Right?

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