The key word, and the FED's response to the current crisis is GROWTH. Growth as a singular objective without being conscious of sustainable systems (the environment, energy, resources in general) is short sighted policy. Our rampant consumption (without afterthought) including buying houses, cars and all the rest on credit is all based on the delusion that 'Growth is Good no matter what'. Uncheched, unhealthy, unsustainable expansion leads to one thing - overshoot. Corrections. A series of crashes. That's all happening now.
Over the past year, meanwhile, rapid global economic growth finally hit capacity constraints. Demand for commodities and food continued to exceed supply, forcing prices sharply higher, raising inflation and further undermining spending power in advanced economies.
So far, maintaining growth has been the priority. Price rises started in food and energy but have now become widespread, with signs of upward pressure on wages. The Asian Development Bank warned last month of the danger of “repeating the mistakes industrialised nations made prior to the Great Inflation of the 1970s”.
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clipped from www.ft.com
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