Oil price increase, inflation, and its economic impact

p Oil Price Increase , Inflation , and Its Economic Impact

2008

Over the last 20 years the standard of living has changed not only in the United States , because of the monetary policies of the Federal Reserve , but the standard of living has increased in many parts of the world because of United States monetary policy . However , this apparent growth is misleading . The world 's engine of economic growth has been fueled by cheap credit and mountains of cash created by government fiat Just like an engine that has a fuel mixture that

is too rich and has a hard time running , the engine of global growth has been too rich with credit and it collapsed into one of the most devastating economic crises since Great Depression . So much credit has been extended that an increasing number of individuals and businesses are now at a point of default . The Federal Reserve has overheated the credit engine because too much credit that cannot be repaid has been extended . Businesses have badly misallocated capital , and consumers have grown accustomed to living beyond their means . This infamous process has been for several years in a row accompanied with another two macroeconomic phenomena - inflation and constant increase in oil prices . Both processes received a lot of attention in the light of unfolding crisis due to their continuous impact on US economy , particularly automobile industry and consumption . Although one may argue that in contemporary context , oil price on world commodity markets decreased significantly , it is safe to...