I read somewhere and I think that it was Simon Johnson that said that higher oil prices and especially higher food prices were not good indicators of inflation. The Arab uprisings are an external driver of prices, not the normal contributor to inflation and extreme weather patterns are driving the food shortages not normal market demands. With these two forces influencing oil prices and food prices, the political and economic leaders need to adjust their repertoire of solutions. I believe that something similar happened in the 1970’s with the birth of OPEC and a horrendous year in food yields and their responses didn’t correctly address the problems, they interpreted those events as signs to deregulate the banking and finance markets which in turn contributed to the bubble and burst cycles we have been seeing ever since. I think that they need to start thinking outside the box and not solely go lockstep into the austerity agenda. All we are seeing is stagnation in growth, not the desired effect.
Read the Article at HuffingtonPost