Bernanke clears monetary policy of any culpability of commodity price spikes

Ben Bernanke washes his hands of any responsibility for the increasing food prices in emerging markets.  However, he is the first one to affirm that his money printing has affected economic growth in the US, but denies that the money that he prints can get funnelled to the emerging markets to act as fuel for inflation or commodity price spikes.

Bernanke argued that a number of factors, all outside of the scope of monetary policy either in the Fed or ECB, that contribute to rising food prices in countries where food makes up a large percentage of their paycheck.  Full transcript via Fed:
The global financial crisis is receding, but capital flows are once again posing some notable challenges for international macroeconomic and financial stability. These capital flows reflect in part the continued two-speed nature of the global recovery, as economic growth in the emerging markets is far outstripping growth in the advanced economies.

In light of the relatively muted recoveries to date in the advanced economies, the central banks of those economies have generally continued accommodative monetary policies. Some observers, while acknowledging that an aborted recovery in the advanced economies would be highly detrimental to the emerging market economies, have nevertheless argued that these monetary policies are generating negative spillovers. In particular, concerns have centered on the strength of private capital flows to many emerging market economies, which, depending on their policy responses, could put upward pressure on their currencies, boost their inflation rates, or lead to asset price bubbles.

Although policymakers in the emerging markets clearly face important challenges, such concerns should be put into perspective. First, these capital flows have been driven by many factors, including expectations of more-rapid growth and thus higher investment returns in the emerging market economies than in the advanced economies. Indeed, recent data suggest that the aggregate flows to emerging markets are not out of line with longer-term trends. Second, as I noted earlier, emerging market economies have a strong interest in a continued economic recovery in the advanced economies, which accommodative monetary policies in the advanced economies are intended to promote. Third, policymakers in the emerging markets have a range of powerful--although admittedly imperfect--tools that they can use to manage their economies and prevent overheating, including exchange rate adjustment, monetary and fiscal policies, and macroprudential measures. Finally, it should be borne in mind that spillovers can go both ways. For example, resurgent demand in the emerging markets has contributed significantly to the sharp recent run-up in global commodity prices. More generally, the maintenance of undervalued currencies by some countries has contributed to a pattern of global spending that is unbalanced and unsustainable. Such imbalances include those not only between emerging markets and advanced economies, but also among the emerging market economies themselves, as those countries that have allowed their exchange rates to be determined primarily by market forces have seen their competitiveness erode relative to countries that have intervened more aggressively in foreign exchange markets.

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