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<p>[QUOTE=&quot;Cloudsweeper99, post: 1101089, member: 3011&quot;]It&#039;s a fine distinction.&nbsp; For example, demand for oil in the world is increasing faster than supplies.&nbsp; This drives the price up.&nbsp; Is this inflation?&nbsp; No.&nbsp; It&#039;s a normal economic response to changes in the supply/demand function.&nbsp; As a secondary effect, the Fed might decide to increase the money supply to fund the higher cost.&nbsp; If they do this, the inflation rate will rise.&nbsp; If they don&#039;t, then people will have to cut back someplace else and there will be no systemic price rise.&nbsp; Currently, we are in the latter situation.&nbsp; Everyone focuses on QE2 but fail to see that there is a tremendous amount of debt liquidation and defaults going on elsewhere.&nbsp; That&#039;s why I watch median personal income levels.&nbsp; People can&#039;t spend more than they have so if food, energy and health care costs rise, something else will be cut from the household budget and there won&#039;t be any monetary inflation.[/QUOTE]</p><p><br /></p>

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