The decision of the US Federal Reserve to hold interest rates steady is a welcome and intelligent decision in the light of the rise in unemployment and the chaos, tragic death and destruction and depressing war in the middle east.The impact of the war upon innocent civilians in Israel and Lebanon is of course the most important consideration.
The scenes of violence shown on nightly television and the fanatical hatred being displayed seems almost pathetic in the year 2006. How little humanity has progressed despite the extraordinary progress in science and technology. Emile Durkheim and Edmund Husserl would not have been surprised as they understood the problem of cultural lag and the coupure between science, technology and moral reason.
Violence, terrorism and hatred ought to have no place in a civilized world.
But there is also an economic shock that is being transmitted through the rise in oil prices that threatens to destabilize the global economy and tip the west into deep recession if the central bankers overreact to it by raising interest rates. The excessive dependence of the United States upon middle eastern oil needs to change so that any problem of blackmail by the oil cartel can be avoided. Canada has an important role to play here but so too does the ecology and alternative energy movement.
In the meantime, Governor Bernanke has acted wisely. I would be surprised if there were any rate hikes any time soon.
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