Posted on 09/30/2007 4:45:03 PM PDT by oblomov
Imagine that a cardiologist told you that aside from the irregular heartbeat, the stratospheric cholesterol count and a little blockage in your aorta, your core heart functions are just fine.
That's precisely what the government's cardiologistBen Bernanke, chairman of the Federal Reservehas just done. The central bank is supposed to make sure the economy grows fast enough to create jobs and make everybody richer, but not so fast that it produces inflation, which makes everybody poorer. "Readings on core inflation have improved modestly this year," the Federal Open Market Committee said in justifying its 50-basis-point interest-rate cut last month, while conceding that "some inflation risks remain."
Catch that bit about "core inflation"? That's Fedspeak for: inflation is under control, unless you look at the costs of things that are going up. The core rate excludes the prices of food and energy, which can be volatile from month to month. Factor them in, and inflation is about as moderate as Newt Gingrich. In the first eight months of 2007, the consumer price indexthe main gauge of inflationrose at a 3.7 percent annual rate. That's more than 50 percent higher than the mild 2.3 percent core rate. The prices of energy and food are soaring, at 12.7 percent and 5.6 percent annual rates, respectively, and have been doing so for years. As a result, the CPIincluding food and energyhas risen 12.6 percent since July 2003, for a compound rate of about 3 percent.
Signs of inflation are evident throughout the economy. When investors fear a rising inflationary tide, they latch onto the driftwood of gold. The day Bernanke cut rates, the price of the precious metal soared to heights not seen since 1980, when inflation ran at nearly 12 percent!
(Excerpt) Read more at msnbc.msn.com ...
Even if Gold goes to $1000, it will be 50% cheaper than it was in 1980.
Yup, gold has done well the last few years but overall is a pretty crappy investment for the long term.
Always look at all available information -- then make your best argument.
There is nothing inherently oxymoronic about the observation: Inflation is under control, even though prices for many essential items are rising significantly.
Inflation, as I have noted previously, is classicly defined as too much money chasing too few goods. It is not econospeak for rapidly rising prices.
At least, it never has been in the past.
And here I was thinking this was a news article.
It's as close as you'll get from the source.
“Its interesting that a hundred years ago inflation referred to expansion of the money supply, but in the 20th century people gradually began to use it to mean price inflation.”
http://pugsleyblog.sovereignsociety.com/2006/12/price_inflation.html
Newsweek is trying to talk the economy down, plain and simple.
There may be inflation, but you how measure cost differences in technological advances in consumer products?
excludes the prices of food and energy,
last year I read an article that also excluded food, energy and health care from the core rate. Talk about cooking the books.
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A few months back I posted a complaint about inflation. Someone responded to me with an article by an economist who said that there really was no increase in the cost of living! His basic reasoning was that if beef becomes too expensive people will switch to chicken and if it becomes too expensive they can switch to turkey and regarding energy, if gasoline prices rise people just drive less. Apparently some people take such idiocy to be serious commentary!
Inflation, as I have noted previously, is classicly defined as too much money chasing too few goods. It is not econospeak for rapidly rising prices.
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I agree with you, unfortunately most Americans seem to believe that inflation does mean rising prices rather than the cause of rising prices.
And who wants to consider the hidden costs of government taxes and regulation?
And here I was thinking this was a news article.
Since it’s “Newsweak” did they tie in how Gitmo guards placing Korans in toilets affected inflation?
/SARC
When I need a dose of Bovine Excrement I turn to Newsweak.
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