11/09/2010 05:20 pm ET | Updated May 25, 2011

QE2 Dangerous for American Wage Earners

QE2 has already damaged the ordinary lives of the middle class and the poor by driving up the price of basic foodstuffs required in the average American's diet. Sugar is up 5.7%; wheat, 5.8%; oil, up 8%; soybeans, up 5% -- all inside of the first week of QE2.

This instant run-up in commodities makes the underlying producer price inflation rate soar at a 20% rate -- far far greater than the CPI, by which we reckon our rate of inflation is running at a measly 1-2% rate. How ordinary American families will survive putting food on the table and driving to work and back is going to even more difficult to achieve than it is now, when so many Americans are out of work and losing their homes.

The contrast between accelerating commodity prices and a decelerating economy is troubling. A policy that makes fortunes for commodity traders, for hedge fund operators, for the gold and silver crowd while squeezing 90% of the nation is a terrible price to pay for replacing deflation with inflation.

The unintended consequences of QE2 will be more dastardly on more people than Ben Bernanke ever figured on. If the PPI stays at 20% or goes even higher, won't it act as a brake on economic growth? After all, it is like a tax on income, and as such is not a symptom of growth. The higher the price of gold, silver, copper, oil and agricultural foodstuffs -- the higher the tax on consumption must be.