Oil is back above $90 a barrel....however, the economy that uses between 20-25% of what the world burns, despite being the home of a mere 5% of the global population, and the controller of the world's reserve currency, is, per The Krug, "... just a bystander in this story."

Of course, in order to make this statement, he is purposely vague, saying America is just a bystander. So does he mean the US, or America? One never knows. We should start using Kafka's prescient designation of Amerika when referring to the USA, since everyone insists on calling it America, when it quite factually is not, and pundits like The Krug can give themselves wiggle room by truthfully saying, they didn't say the US, they said America.

But that aside, The Krug's latest editorial in the NYT is a beautiful exercise in the pundit's favorite game of economic obfuscation. Going on from his above statement, he declares "Yet inflation has remained low." Even as India, Russia, China, Brazil, all grapple with the effects of Benron's exported inflation. Just like Greenspan's assertion that surging asset prices was a sign that inflation was under control, Krugman pretends there's no connection between the rising prices in China and the Fed's policies.

He goes even further.

He states "You do have to wonder what these people were thinking two years ago, when raw material prices were plunging. If the commodity-price rise of the past six months heralds runaway inflation, why didn’t the 50 percent decline in the second half of 2008 herald runaway deflation?"

Sorry Krug, but it did. And not only that, as a Nobel-prize-winning, Princeton economics graduate, and NYT op-ed page opinionator, you are quite aware that the only thing that kept runaway deflation from occurring was the extraordinary, extra-legal machinations of Benron and the unsatisfactorily small (to you) amount of the Obama stimulus package. This smug argument
gives new meaning to the word disingenuous. Despite his lack of any economic acumen, even The Krug knows that without those efforts much of the world would now be in an intractable debt-induced deflationary spiral.

His inconsistency aside, however, he insists that "those blaming the Fed for rising commodity prices is that they’re suffering from delusions of U.S. economic grandeur. For commodity prices are set globally, and what America does just isn’t that important a factor."

Please refer to the top stat for illumination on this point while we assemble three facts the Krug's quite aware of, but that don't fit in with his theme-of-the-day:

1) A scant 5% (that's US in Amerika) of the global population burns close to 22% of the world's oil supply.

2) Oil is the basis in price of all other commodities: industrial, mining, farming, as it is the energy burned to produce those commodities. As the price of oil goes up, all other commodities follow.

3) The price of oil is denominated in Dollars, the world's reserve currency, the value of which, the FED has set out on a determined policy to debauch.

To see the importance of the last item, we could read The Krug's op-ed entitiled "This Is Not a Recovery", in which he outlines the new-normal of 10% unemployment and another 10% of under employment, which in turn presupposes chronic plant underutilization, which further suggests an inability to pay back a back-breaking corporate debt-load with nobody working, and with the US "balance" of trade intractably still billions and billions in the red: ie, it ain't gonna happen, which is why we're at step 3 above.

Yet with a complete inability to pay back the enormous debt-load we already are laboring under, whose one of the loudest critics that doubling the federal deficit isn't enought stimulus? Yup: The Krug.

But he does end his piece on a truthful note, albeit, unintentionally (or is it? What do you think? I'm really not sure, he's that much of a sidewinder).

Here it is:

"... rising commodity prices are basically the result of global recovery. They have no bearing on U.S. monetary policy. For this is a global story; at a fundamental level, it’s not about us."

To parse this nonsense statement, we first have to put it in order. Who ever claimed that rising commodity prices have a bearing on US monetary policy?

Right. No one. It is exactly the other way around. The assertion is, and has always been, that US monetary policy has a bearing on commodity prices. Only a hack like the Krug would claim otherwise. He seems to suggest that all the Fed has to do is raise interest rates and the price of oil will drop (hmmm, that could actually be true, but is he really suggesting that that's the basis of Benron's policy?)

But the more important part of the statement is the second half, where he ends his article by asserting that "U.S. monetary policy is not about US".

Finally something I can agree with him about. That is exactly correct. And is as it is designed. As the issuer of the World's reserve currency, US monetary policy is about global trade and supporting the regime of global-striding TNC's (Trans-national Corporations: there are no
multi-national corporations, that term is a misnomer as ALL corporations are based in one Homeland on which they depend for their physical security and jurisprudence. If US Steel believes China is dumping, it doesn't ask the Chinese government to bring that fact to the attention of the WTO) and their cohorts, the Banksters.

The US is the only OECD country without a Central Bank. It has only a private Corporation running the monetary regime of the World's Reserve Currency for the benefit of World Trade. It has no one in the US to whom it must answer, only in Russia, China and Japan. But for the star economics columnist at the NYT to brazenly assert that US monetary policy has nothing
to do with us, is a rare moment of lucidity in an otherwise flailing logic.