The combination of tight energy markets and high unemployment poses a dilemma for monetary policy. If policy is kept easy to boost growth, unemployment will decline but the oil market is at risk of overheating. But if policy is tightened to confront the pressure from higher oil prices on (headline) inflation, unemployment is likely to remain far above desirable levels for a long time to come. Zero Hedge quoting the economic team at Goldman Sachs
How long have they known about this, the oil shortage? Probably three years, that is ever since the oil crash of July 2008. Most of the last three years has been about government and their corporate shills hiding this fact. That is why economists, especially the keyensian variety cannot be trusted. Moody's is still in denial, claiming an ever growing federal spending will cure our problems.
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