Not everyone agrees. Growing demand in emerging countries, including China, helps explain commodity price increases, said Chris Rupkey, chief financial economist for Bank of Tokyo- Mitsubishi UFJ Ltd. in New York.
Still, Sharma said the situation reflects the limits of the Fed’s main tool for influencing the economy -- controlling the amount of money in the financial system.
“You can print all the money you want but you can’t control where it will end up,” he said. “It ends up in the commodities sector and benefitting the wrong people.”
While higher commodities prices can also fuel economic growth, that effect is undercut by the fact that the U.S. is a net importer of commodities, Stiglitz said.
Sheik’s Share
“It’s redistribution from consumers to owners of these resources, from a car owner to a sheik,” he said. The negative consequences fall hardest on low-income people, who spend a higher percentage of their income on food and fuel than better- off people, Sharma said.
Gasoline prices are 23 percent higher than they were in June 2009, according to the American Automobile Association.
In the view of Bank of Tokyo-Mitsubishi’s Rupkey, the bigger Fed-related issue is the comparatively paltry return savers get -- a result of the Fed’s decision to hold near zero the interest rate it charges banks. This week marks the fourth anniversary of ZIRP, the zero interest rate policy, which hurts Sanchez and others who have their savings in interest-bearing accounts to keep the principal safe, Rupkey said.
Sanchez, a 65-year-old former director of library services at LIM College in New York, teaches part-time at the Fashion Institute of Technology to make ends meet.
Unaffordable Retirement