Anybody talking about skyrocketing inflation in Asia?

Question

Sounds like this will be the next crisis in the global scheme of things. What effect will this have on the US economy?

Answer 1

There is inflation in Asia, but it is hardly skyrocketing as compared with historical examples of hyperinflation:

http://en.wikipedia.org/wiki/Hyperinflat...

In fact, while inflation is high in China, it is clear that everyone expects the Chinese government to be serious about deaing with it:

http://www.nytimes.com/2008/03/05/world/...

http://www.nytimes.com/2008/06/11/busine...

On the other hand, inflation will be a world-wide problem as higher commodity prices (food, oil, metals, etc.) take their effect. And, as in the U.S., the immediate response to economic problems is, generally, to stimulate the economy by pumping in money, causing inflation.

In the U.S. the Fed has hinted that it will stop cutting interest rates, but it has not said it will raise the already low ones so inflation may well become the next big problem - here in the U.S. as well as abroad - and not just in Asia.

And it is certainly the case that stimulated  demand will raise prices for goods the U.S imports, reducing the American standard of living somewhat.

But I'd guess the imported inflationary effects are much smaller than the homegrown ones due to our own consumption of oil, the local prices for American grown grain, etc.

(Recall it is the U.S. government that is subsidizing the use of corn as a fuel, keeping much of what is grown out of the food chain, and raising food prices all over the country and the world.)