This follows the wide spread critique by various analysts and opposition leaders for the government’s quantitative easing that will increase liquidity. The monetary policy stimulus plan is to increase the amount of cash in the market through liquidity and printing of money. The fear among the critiques is that this will only drive the prices of food and increase inflation.
This is supported by analysts from these emerging markets that fear that such measures will only undercut the dollar there by increasing inflation. Bernanke refuted these statements by pointing out that the aim is to improve the domestic economy. He however, also conceded that the economy of the nation was taking in heat. In support of his response Bernanke argued that the emerging economies were facing inflation from the drive in consumer demands in items like meat. He argued that by the increase demand for meat rather than cereals and grains, energy and food was increasing and thereby increasing the prices.
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