In an extremely interesting piece, Seeking Alpha writer James Picerno takes the view that demand from the emerging markets is fuelling inflation in the US and other developed markets. The US Federal Reserve’s monetary policy, he argues, is basically playing into the hands of the developing economies, who have intentionally stimulated demand to prod along higher growth stoked by exports.

The problem is, the exports from these developing markets, primarily India and China, are overwhelmingly targeted at the US market. Take demand out of that market and exports begin to flounder – which then impacts business, employment and buying power in the developing economies…

The Indian gem and jewellery industry, as also its Chinese counterpart, is trying to make up for lost exports by going after an expansion in the domestic market. They don’t really have a choice. After a disappointing JCK Las Vegas show, where else can they look for customers? But as I’ve said before, the combined buying of the Chinese and Indian markets at current levels can’t even begin to make up for the lost exports to the US. And as the exports were the thing that brought about prosperity and consumer demand at home…

The emerging markets have to focus on inflation in their own markets, which is surging to unacceptably high levels – it’s all part of the ‘global inflation’ that the economic pundits are talking about. So while finding local solutions to their inflationary problems, these markets have to also keep one foot inside the global economic chalk circle. ‘Think Globally, Act Locally’ is what Picerno’s piece is titled. The question is, can they?