Increased Demand, Decreased Supply in Energy Market

According to Ian Talley of the Wall Street Journal, the International Monetary Fund has said that international markets need to slow the growth of their economies to prevent inflations in both food and energy prices. If these inflations are not prevented, the overall repair of the global economy could be threatened. Countries such as China, India, and Brazil are becoming high in demand for both food and energy, but lack of supply in developed countries is resulting in economic troubles.

Many people blame these troubles on the U.S. Federal Reserve because of its recent policy to keep rates low so as to ultimately receive more money from "emerging markets" (Talley). This approach, known as quantitative easing, is one of the Fed's attempts to help repair the economy. The problem is that supply levels cannot keep up with demand, especially in the energy sector.

To combat this issue, the International Monetary Fund has teamed with the Group of 20 largest nations to suggest global guidelines for directing capital flow. With greater investments in the food and energy markets, the global economy's overall recovery should improve.

Source:

Talley, Ian. "IMF Warns on Inflation, Growth Risks." The Wall Street Journal 5 Feb. 2011. The Wall Street Journal Digital Network. Web. 6 Feb. 2011.