Bernanke vs. Trichet: Who Will Win the Fight Against Inflation?

by Florida's #1 Mortgage Planner on June 10, 2008

Bernanke Finally Talks About Inflation Concerns - There May be Hope Yet Ben Bernanke is only recently acknowledging the threat of inflation is stronger than he expected (something I have written about since he and the Fed gang started cutting rates).  Chances are he is only acknowledging fact due to increasing criticism and the that Jean-Claude Trichet will likely kick his butt in the way to handle inflation.

I will admit that Trichet and the European Central Bank (ECB) have a big advantage in watching Trichet Vows to Fight InflationBernanke and buddies fail to keep inflation on a leash.  He is opting to forego rate cuts despite the threat of a recession in an attempt to keep inflation under control.  I applaud the man for not letting things he shouldn’t be fighting get in the way of the real battle.

"In our next meeting we do not exclude to raise rates by a small amount," Trichet told reporters in Frankfurt after the ECB meeting. I don’t say it’s certain, I say it’s possible."  (CNBC)

Bernanke can only mimic the same rhetoric, now that he can "see" inflation…

Federal Reserve Chairman Ben Bernanke Monday sounded a warning over soaring energy costs and said the central bank would "strongly resist" any tendency for an inflationary psychology to take hold. (CNBC) (My comment:  A little late, aren’t we Mr. Bernanke?)

Unfortunately, it all comes back to the same old rhetoric…

"We have taken a number of actions to promote financial stability and remain strongly committed to that objective," he said. (CNBC)

What exactly the Fed will do remains to be seen, but if past history is a good indicator, rates will not be raised and the Fed will come up with some other ill-fated "creative" way to assist the economy in further destroying itself.

Long live stagflation!

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