Ignore the Fed Chairman Behind the Curtain

The Fed isn’t worried about QE2 causing inflation, because the high price of oil is due to increased demand from developing countries. It’s not, Bernanke assures us, because excess dollars and low interest rates are conspiring to force investors to speculate on commodities. You know, instead of seeking solid-if-modest returns in our oh-so-robust economy.

Well.

The Saudis — who know a thing or two about oil — disagree:

Saudi Arabia’s oil minister said on Sunday the kingdom had slashed output by 800,000 barrels per day in March due to oversupply, sending the strongest signal yet that OPEC will not act to quell soaring prices.

If the demand were there, the Saudis would not be cutting supply, not given the fragile health of the global economy. Prices look to me like they’re up on a combination of local unrest and Federal Reserve profligacy.