Interest Rates on Hold - Watch for inflation @3+%- Quantitative Easing#3(pt2)

It's an election year in the USA
A presidential election year.

Mr O'Bama (intentional) from Chicago doesn't want to be a One-timer (second class in the history books) so he'll do anything to perk up the economic numbers that flood the papers (irrespective if their true indicators of anything -after all that seasonal-adjusting etc).

Quantitative Easing increases the money supply (if the banks actually lend it out & don't just hoard the increase on their balance sheets) and theoretically stimulates consumer/business demand by loosening "tight money" conditions.
See Bloomberg today"Gross Says QE3 Getting Closer as Goldman Sees Easing"

Reducing interest rates theoretically does the same thing - except rates are at near zero now.

So ...

Phase one of 'stimulating' is to reverse a downturn in spending, maybe in consumer confidence too

but...

The risk is that by making money too "borrowable" that prices get pushed up
Borrower says "Heck at 3-4% interest and with 2-3% inflation ... the money is nearly free"

Oil (and anything made with oil -plastics etc etc) has gone up due to speculation in the futures/derivatives market. The speculators are expecting an actual shortage (due to war, embargo, disaster or politics) and are bidding up the future price .... which influences the current price.

Crops that can be used to produce Ethanol (a very expexpensive-but heavily subsidized partial-replacement for oil as gasoline) are being grown instead of crops for food. This pushes up prices for food (wheat as example)

Many greater minds than me are trying to explain the Euro mess (a currency with nothing behind it except the governments that use the currency, those governments have no money except for what they can extract from their populations & business ... what happens when the people/businesses can't/don't/won't pay)
Martin Armstrong is as successful at explaining it as anyone (scroll to bottom)