Depending on how bad a crisis gets, gold ranges from being between the best answer and the only answer.”

Inflation is on everyone’s lips these days…everyone in Asia, that is. Because Fed Chairman, Ben Bernanke is so busy pumping up the US money supply to battle a perceived deflationary threat here at home, he is putting pressure on overseas economies to print money at the same pace, in order to prevent their currencies from appreciating against the dollar and, thereby, become less “competitive.” The mechanics of all this are a bit complicated, but suffice it to say that the US is “exporting inflation.”

This important topic hit the front page of yesterday’s The Wall Street Journal’s Money & Investing section. The paper posted official inflation rates for the biggest emerging market economies in Asia.

India leads the pack with an 8.6% official inflation rate. At that pace, prices would double in India in less than nine years. Indonesia is at 5.8%, China at 4.4% and South Korea at 4.1%. These are on the high side and increasing. Folks worry that central banks in these countries will tighten up their loose monetary policies to try to rein in inflation.

In so doing, these people worry economic growth will slow or even reverse. And that would have a wide impact on the world’s stock markets, as most of the growth that companies enjoyed in the last year came from Asian markets. After all, those rising commodity prices that delight commodity investors are due in good part to the demand from places like Asia.

China is already at work trying to contain price increases. It has implemented price controls, which never work. It has also tried to boost the reserve requirements of its banks, essentially forcing them to hold more in reserve and lend less.

This kind of tinkering and meddling creates its own problems and almost always ends badly. I should send a copy of Henry Hazlitt’s Economics in One Lesson to the world’s central bankers and policymakers – if only they’d read it.



Read more: America's Leading Export: Inflation http://dailyreckoning.com/americas-leading-export-inflation/#ixzz16...