last week I topped my article regarding the Federal Reserve’s QE that pumps the liquidity to the supply side instead of the demand side. The article further pinpointed that the consequence of the QE, accompanying with high oil price, will reluctantly squeeze the consumer spending and hurt the U.S. economy.
The recent spikes of the commodity prices, in my opinion, are direct consequences of the QE when the printed liquidity flows outside of the United States, causing the inflation of the emerging economies instead of staying in the U.S. and boosting its own economy. Now the backfire of QE, the high oil price, is here. When consumers spend more on the gas they have to cut budget on the others. The strength of the U.S. economy is on the serious test in the next few months. We are going to see how it will be unfolded.