The Federal Reserve has made food and gas more expensive, one television news show host said Friday, but evidence shows that's not really the case.
"Easy money has also sent commodity prices higher. This is the rub," Erin Burnett said Friday on her CNN show "OutFront." "Gas prices, as you can see, about double. Regular unleaded was $1.89 in November of 2008. It's now $3.82 a gallon. And food prices are up 54 percent over that same time frame. So easy money isn't so easy."
But there has been no correlation between the Federal Reserve's quantitative easing and commodity prices. The Federal Reserve started its first round of quantitative easing, or asset purchases aimed at stimulating the economy, in November 2008 and its second round in November 2010; there was no resulting, lasting spike in commodity prices. Commodity prices actually peaked in the summer of 2008 before quantitative easing began.
Economists note that food and oil prices rise largely because of global problems, not central banks such as the Federal Reserve.
"This is nonsense," Dean Baker, co-director of the Center for Economic and Policy Research, wrote in an e-mail. "These prices have been moving largely in response to real conditions of supply and demand (e.g. the Libyan civil war raised oil prices by taking supply off line, the summer drought in the U.S. has raised corn prices) often amplified by speculation."
Two-thirds of the price of gas consists of the price of oil, according to the government. Government data shows gas cost more than $4 per gallon in the summer of 2008, before quantitative easing began. Now gas costs less than that.
Nobel Prize-winning economist Paul Krugman also has repeatedly debunked the claim that the Federal Reserve's asset purchases have caused commodity prices to rise. Instead, he writes, food and oil prices have risen because more people around the world need more food and gas, but the supply of oil remains limited and more extreme weather has hurt food production.
"What the commodity markets are telling us is that we're living in a finite world," Krugman wrote in the New York Times in December 2010. "As more and more people in formerly poor nations are entering the global middle class, they're beginning to drive cars and eat meat, placing growing pressure on world oil and food supplies. And those supplies aren't keeping pace."
Burnett also made misleading claims about the Federal Reserve on her show Aug. 31, when she compared the Federal Reserve's asset purchases to government spending. But the Federal Reserve actually has created new money to buy bonds.
Burnett, CNN's chief business and economics correspondent, has previously worked at CNBC, Bloomberg TV, Citigroup, and Goldman Sachs.
Earlier on HuffPost:
On The Stimulus
The GOP platform claims that "the waste of billions in 'stimulus' funds'" had "no payoff in jobs." In fact, <a href="http://takingnote.blogs.nytimes.com/2012/06/08/c-b-o-s-take-on-the-stimulus/" target="_hplink">the 2009 stimulus saved or created more than 3 million jobs</a>, according to the nonpartisan Congressional Budget Office.
On Federal Regulations
The GOP platform claims that federal regulations cost $1.75 trillion per year. But researchers have <a href="http://www.sei-international.org/mediamanager/documents/Publications/Climate/Heinzerling_Ackerman_MJEAL_2012.pdf" target="_hplink"> largely discredited</a> this figure.
On Health Care Reform
The GOP platform claims that the Affordable Care Act is "budget-busting." However, the Obama administration's <a href="http://www.huffingtonpost.com/2012/08/20/paul-krugman-niall-ferguson-newsweek_n_1810136.html" target="_hplink">health care reform law actually reduces the deficit</a>, according to the nonpartisan Congressional Budget Office.
The GOP platform claims that without reforms, Medicare and Medicaid "are headed for bankruptcy." Though Medicare has <a href="http://www.cbpp.org/cms/index.cfm?fa=view&id=3532" target="_hplink">long-term financial problems</a>, it is not on the brink of bankruptcy, according to the Center for Budget and Policy Priorities.
On Welfare Reform
The GOP platform claims that Obama's decision to allow waivers for welfare reform's work requirements was "in other words, to administratively repeal the most successful anti-poverty policy in memory." But the work requirements still are in place, according to <a href="http://www.theatlantic.com/politics/archive/2012/08/what-obama-really-did-to-welfare-reform/260931/" target="_hplink">several</a> <a href="http://abcnews.go.com/blogs/politics/2012/08/fact-check-does-obama-want-to-gut-welfare-reform/" target="_hplink">media outlets</a> and Dean Baker, co-director of the Center for Economic and Policy Research. Welfare reform was not so successful either; as Baker notes, <a href="http://www.huffingtonpost.com/huff-wires/20120723/us-poverty-in-america/" target="_hplink">the poverty rate</a> is on track to reach its highest level since the mid-1960s.
The GOP platform claims that "the inflation tax is regressive." But inflation, which is at historically low levels, would help low-income and middle-income people the most by <a href="http://www.bostonglobe.com/ideas/2011/09/12/the-word/8YP9RCx7i5amoAwNCr4TcL/story.html" target="_hplink">stimulating job growth</a> and making it easier for debtors to pay off their debt, according to Dean Baker, co-director of the Center for Economic and Policy Research.
On Corporate Tax Breaks
The GOP's platform claims that reducing the corporate tax rate would "spur job creation here at home." Last time the U.S. <a href="http://www.huffingtonpost.com/2011/06/24/corporate-tax-holiday-jobs-investment_n_883827.html" target="_hplink">did that, in 2004</a>, corporations laid off thousands of U.S. workers, according to the Center on Budget and Policy Priorities.
On The Housing Bubble
The GOP platform claims that "Fannie Mae and Freddie Mac were a primary cause of the housing crisis because their implicit government guarantee allowed them to avoid market discipline and make risky investments." On the contrary, <a href="http://www.cepr.net/index.php/blogs/beat-the-press/david-brooks-discovers-that-it-was-all-fannie-maes-fault" target="_hplink">the riskiest mortgages were securitized</a> by big banks, not Fannie Mae and Freddie Mac, according to Dean Baker, co-director of the Center for Economic and Policy Research.
On Health Care Reform
The GOP platform claims that voucherizing Medicare is "the only way to limit costs." However, <a href="http://www.huffingtonpost.com/2012/06/27/supreme-court-health-care-decision_n_1630596.html" target="_hplink">Obamacare already reduces Medicare spending</a> without resorting to what former federal budget director <a href="http://www.huffingtonpost.com/2012/08/20/peter-orszag-paul-ryan_n_1812046.html" target="_hplink">Peter Orszag calls "the health care competition tooth fairy."</a>
On Home Sales
The GOP platform claims that "home sales remain weak." But existing home sales have risen more than 25 percent since the mid-1990s, as should be expected with population growth, according to Dean Baker, co-director of the Center for Economic and Policy Research. "Investment in housing is down because the building boom of the bubble years gave us a record level of housing vacancies," Baker notes.
On Social Security
The GOP platform claims that "younger Americans have lost all faith in the Social Security system." However, <a href="http://www.gallup.com/poll/1693/social-security.aspx" target="_hplink">only 21 percent of non-retirees</a> say they do not expect Social Security to be a source of income when they retire, according to Gallup.
The GOP platform claims that "homeownership...helps Americans create wealth." However, <a href="https://twitter.com/AJInsight/status/235488109419196416" target="_hplink">the returns on U.S. housing investment have been nearly flat</a> over the past century when adjusted for inflation, according to Yale professor and housing expert Robert Shiller.