Global Inflation Is Rising, Rising, Rising

Inflation is a bad, bad thing.  It hurts most everyone.  As gas prices, food prices and the prices for essential rise uncontrollably, people and companies simply cannot keep up with the market pressures.  People or consumers have to go further in debt, more debt does not get paid, more people are forced into bankruptcy, and then companies and creditors are squeezed.  They immediately get more aggressive, more strident, more litigious.  Operations are set in motion to collect, collect, collect, and everything just appears to spiral out of control.  Once they get their organizations headed in a particular direction, as we know, creditors and companies cannot seem to turn the system off or train it to make distinctions.  The automatic stay and discharge injunctions will be violated.

According to a report by HuffPo there is currently no where to hide from the bogeyman that is inflation.  Prices in one in four countries, many of them in emerging markets, are accelerating at a double-digit pace, which puts them at least two and a half times the 4 percent annual U.S. headline inflation rate, according to new research from Morgan Stanley.  With this, the U.S. economy has slowed to nearly a standstill in the last year because of the mounting inflation and the collapse in the housing and mortgage markets. Other industrialized countries have seen about a 2 percent average rate of growth while emerging economies have topped 7 percent.  That growth is now being threatened by inflation.  Food prices have jumped 39% from February 2007 to 2008, led by wheat, soybeans, corn and edible oils, according to the International Monetary Fund.

Morgan Stanley economists Joachim Fels and Manoj Pradhan said they were "flabbergasted" by their findings that 50 countries had double-digit inflation rates. On that list were six of the 10 most populous countries in the world, including India, Indonesia, Pakistan, Bangladesh, Nigeria and Russia.  In total, those facing such pricing pressures accounted for 42 percent of the world population.  "In other words, close to three billion consumers are currently experiencing double-digit rates of price increases," they wrote in a note to clients.

And, the problem is that soaring inflation is not easy to tame. Some countries, such as India where inflation is running at around 11 percent, may have no choice but to boost interest rates.  Many emerging-market economies also link their currencies to the dollar, and because of the U.S. Federal Reserve's loose monetary policy stance right now the central bank has aggressively cut interest rates in response to the credit crisis and that has helped feed inflationary pressures.

The longer inflation remains elevated, the more damage it will do to long-term economic growth.

As we have often seen, as goes the World eventually goes the United States.