What is the relationship between the credit crunch and inflation?
Today, the latest US producer price inflation rate was published. The rate is running at almost 10 percent. Ever since, Northern Rock hit the skids, and LIBOR rates went mad, US inflation has reached ever skyward.
The reason isn't hard to find. It is the Fed's response to the crisis. Bringing interest rates down to 2 percent has set off inflation. It won't stop until the Fed calls time and raises rates.