Friday, September 28, 2007

Inflation? What Inflation? (Continued)

Winner of the "no kidding" award of the day:

Commodities had the biggest monthly gain in 32 years, led by wheat, crude oil and gold, as the dollar's slump enhanced the appeal of energy, grains and precious metals as a hedge against inflation.

The 19-commodity Reuters/Jefferies CRB Index was up 8.1 percent this month, the most since July 1975. Wheat climbed to a record in September amid a global grain shortfall, boosting corn and soybeans. Oil also hit a record, and gold reached a 27-year high. The Federal Reserve cut borrowing costs to bolster the U.S. economy, sending the dollar tumbling.

``The Fed has signaled pretty clearly that they will answer the problem of a slowing economy with greater liquidity,'' said Chip Hanlon, who manages $1 billion at Delta Global Advisors Inc. in Huntington Beach, California. ``We're in a bullish phase for commodities.''

The Fed rate cut is already stoking inflation. Can't wait to see what happens after Uncle Ben showers us with a 25 bps cut in October and either a 25 or 50 bps rate cut in December.

$95 oil? $15 wheat bushels? $5 loaves of bread?

Gotta love this "bestest economy ever."

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