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WHY ASIA CAN'T IMITATE FED'S INFLATION AMNESIA: ANDY MUKHERJEE

Bloomberg, March 20, 2008

March 20 (Bloomberg) -- The much-anticipated U.S. recession, if and when it does arrive, will undoubtedly extract a price from economies in the Asia-Pacific. That doesn't mean the U.S. Federal Reserve's efforts at mitigating the slowdown are going to be any less expensive for the region.

The source of that economic cost is inflation -- both the part that's already realized because of sky-high commodity prices and the part that's expected from the current round of U.S. monetary expansion. Actually, even the elevated prices of minerals, metals and food may be less a result of explosive world demand, led by China and India (which is nowadays the standard explanation proffered by many economists) and have more to do with cheap money, as Harvard University Professor Jeffrey Frankel has recently argued.

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