"Devaluation" is inflation, just a less loaded word. That "devaluation" is ongoing with two upticks in the rate in the last 6 years. Real inflation right now is very high and at Carter levels. The official numbers are less onerous because periodically those who report the official rate remove the the most rapidly rising prices from the "basket" of prices used to compute the official rate. The proffered rate is not the inflation rate. It does not measure the actual inflation rate but measures, instead, the rate of increase of a few selected prices. Other prices, like oil, are not included because there are other reasons that can be cited for oil's rise.
If there were not inflation, the drastic rise in oil MUST cause a FALL in the average level of all other prices. That is manifestly not the case. The main clue that inflation is Policy is the nonpublication of the M3 measurement of money. That ceased to be published when it began to be obvious that the money numbers therein showed higher inflation rates than advertised by the government.
Inflation is the result of how we are paying for the war. We aren’t paying additional taxes to cover the expense, we are borrowing. Congress is authorizing increases in the national debt, which increases the money supply. And that’s inflationary.
If we don’t curtail government spending and reduce the trade deficit the dollar will continue to fall.
I agree that the FED is trying to inflate. We’ll see if deflation wins overall. What I’m reading now makes me suspect that the US government doesn’t have enough ink in the presses to inflate fast enough to head off eventual catastrophic deflation (I’m not talking Great Depression II, but more 1990s like Japanese deflation).
I don’t think they are really inflating, try as they might. No doubt they have crushed the dollar so some inflation has occurred but it seems to be offset at least by deflation in areas other than food and energy. The FED is not really pumping yet, just robbing peter to pay paul. Lee Adler of www.capitalstool.com continues to demonstrate that every time the Fed pumps the economy, they turn right around and take it back. They seem to be tightening as much as loosening.
http://acheson.wordpress.com/2008/06/06/fed-drained-week-ending-662008/
I’m not sure that Bernanke has really started to run the Xerox yet. It only feels like it because we are getting inflation from a weak dollar. I think the national debt and continuing trade deficit have more to do with that, than the recent plunge in the FFR, since there is not any appreciable lending going on to stimulate inflation.