The Federal Reserve has made food and gas more expensive, one television news show host said Friday, but evidence shows that's not really the case.
"Easy money has also sent commodity prices higher. This is the rub," Erin Burnett said Friday on her CNN show "OutFront [ http://outfront.blogs.cnn.com/2012/09/07/another-weak-jobs-report-is-fed-chairman-ben-bernanke-ready-to-act/ ]." "Gas prices, as you can see, about double. Regular unleaded was $1.89 in November of 2008. It's now $3.82 a gallon. And food prices are up 54 percent over that same time frame. So easy money isn't so easy."
Economists note that food and oil prices rise largely because of global problems, not central banks such as the Federal Reserve.
"This is nonsense," Dean Baker, co-director of the Center for Economic and Policy Research, wrote in an e-mail. "These prices have been moving largely in response to real conditions of supply and demand (e.g. the Libyan civil war raised oil prices by taking supply off line, the summer drought in the U.S. has raised corn prices) often amplified by speculation."
Nobel Prize-winning economist Paul Krugman also has repeatedly debunked the claim that the Federal Reserve's asset purchases have caused commodity prices to rise. Instead, he writes, food and oil prices have risen because more people around the world need more food and gas, but the supply of oil remains limited and more extreme weather [ http://www.nytimes.com/2011/02/07/opinion/07krugman.html ] has hurt food production.
"What the commodity markets are telling us is that we're living in a finite world," Krugman wrote in the New York Times [ http://www.nytimes.com/2010/12/27/opinion/27krugman.html ] in December 2010. "As more and more people in formerly poor nations are entering the global middle class, they're beginning to drive cars and eat meat, placing growing pressure on world oil and food supplies. And those supplies aren't keeping pace."