The great puzzle in current global developments is indeed the co-existence of abundant liquidity and low consumer inflation. Even soaring oil prices and the elevated prices of non-fuel commodities have yet to affect the overall price level significantly. Such low levels of inflation have not been witnessed since the pre-World War period.
So I remain puzzled: is Asia not exporting deflation despite overall increases in global monetary aggregates? Or, will we inevitably see global inflation eventually because of this global glut of liquidity? Or, is the spill over essentially in asset prices? Strong global growth despite soaring oil prices The second puzzle is the continuing strong global growth despite high oil and commodity prices.