Friday, February 4, 2011

Quote of The Day

"But what if commodity prices are instead embarked on a long term uptrend against the prices of goods and services in the developed economies, driven by the rapid growth in the emerging economies? In that case, the commodity price shock would have a permanent effect on input prices in the developed economies, and it would not be appropriate for the central banks to ignore this shock. In fact, if they ignored it, they would simply be accommodating a permanent inflation shock to the system, which is what they did in the inflationary 1970s."

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