"Greatly complicate" may be an understatement. Consider the scenario where rising food and energy prices are contributing to the housing slump and "economic stabilization" measures are contributing to rising food and energy prices. The negative feedback from lower interest rates could cancel out the positive throughputs. And then what? In the article below, a bank economist is quoted as resolving the contradiction by conceptualizing a simultaneous metabolic process as a consecutive mechanical one.
Feb. 20 (Bloomberg) -- The two-year housing slump pushing the U.S. economy toward a recession hasn't alleviated inflation pressures, reports today showed. Consumer prices rose 0.4 percent from December, with costs excluding food and energy climbing 0.3 percent, the most since June 2006, the Labor Department said. Builders started work on 1.012 million homes at an annual rate in January, close to a 16- year low, the Commerce Department reported in Washington. The figures mean Federal Reserve Chairman Ben S. Bernanke will need to consider raising interest rates as soon as the economy stabilizes. Bernanke, who last week said the Fed is prepared to keep lowering interest rates, warned that faster inflation would "greatly complicate" the central bank's job. "What this means is that they don't have as much comfort to play with rates" Ellen Zentner, an economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, said on Bloomberg Television, referring to Fed officials. "Once the U.S. economy looks like it's started to stabilize, they're going to have to jump right back in to that, raising rates back up to neutral." -- Sandwichman
