Thursday, February 22, 2007

The Fed Still Doesn't Get It

Yesterday's U.S. CPI report were pretty bearish for the U.S. economy. Despite the now reversed decline in energy prices, the CPI actually rose 0.2%, as "core" prices rose 0.3% and food prices rose 0.7%.

And with the price of corn and other commodities rising fast, price inflation is unlikely to recede.

The Fed of course, pretends to be fighting the trend of rising prices. But as Caroline Baum points out, the Fed's money creation is of course the source of all of this. The Fed's inflation reporting, Baum points out, is as ridiculous and misleading as that of Zimbabwe.

2 Comments:

Blogger Flavian said...

The US price of one Big Mac according to the Economist was in the begining of last year $3,15, than the price fell to $3,10 and now the price is $3,22.

Did it get better, tastier or did just the purchasing power of the US dollar continue to decrease?

2:33 AM  
Blogger stefankarlsson said...

Well, not that I think the price of a Big Mac matters more than the price of a McFeast or Coca Cola light or whatever, but yes, that is an example of reduced purchasing power of the U.S. dollar.

12:53 PM  

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