Jun 16th, 2009 at 9:28 am
Can We Can the Inflation Fear-Mongering?
I continue to be baffled that with all the problems facing the economy and all the genuinely debatable policy issues in play, some people continue to be spending most of their time warning us of the dangers of inflation. Consider:
So-called core producer prices, which exclude food and energy costs, fell 0.1 percent, indicating broad pressure on prices because of lower demand across the economy.
I think the inflation rate should at least be above zero before we start worrying that it’s gotten out of control. I don’t think that’s too much to ask.
53 Responses to “Can We Can the Inflation Fear-Mongering?”
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June 16th, 2009 at 9:31 am
I agree.
Almost all the “expert” opinion heard on these matters are from people who have a vested interest in how you use their information. Someone who is in an inverse Treasury ETF, is going to want people to sell Treasuries because they fear inflation. Ditto for people long gold or oil.
June 16th, 2009 at 9:32 am
Yglesias, would you think before you write sometime? Jeebus.
Inflation scares are useful to change the expectations from deflation which is really, really, really, bad, to inflation which is controllable.
I understand you’re trying to help, but confine it to issues you know about. Please.
June 16th, 2009 at 9:43 am
A lot of TV personalities and newspaper columnists are people who (1) didn’t take economics in college, and haven’t taken the time to learn it since, and (2) lived through the ’70s and remember how scary “stagflation” was.
Combine those two, and inflation fear-mongering is what you get. They don’t mean any harm; they just don’t know any better (and are too proud to admit it).
June 16th, 2009 at 9:46 am
Are you really baffled? It is an inherently political argument looking around for some sort of economic rationalization, and this is the best they can come up.
That said, shooter242 is right for once: encouraging people to worry about future inflation would actually be helpful for the economy. Of course, the big caveat is that it would be very bad if that translated into political action which prematurely cut off the fiscal stimulus efforts.
June 16th, 2009 at 9:47 am
Oil is up 25% and Green Shoots has died.
June 16th, 2009 at 9:50 am
Inflation seems unlikely anytime soon. And if it does come, it’s controllable.
Another bubble, however, kind of worries me. Keep the spicket flowing too fast for too long and of course things could get bubbletastic again. Maybe that’s an argument for better regulation. Or maybe that’s an argument for the Fed to figure out how to delicately pop a bubble before it gets too big. Or maybe it’s a bigger problem, going back to Matt’s post yesterday about income stagnation. I don’t know.
June 16th, 2009 at 9:51 am
I think the inflation rate should at least be above zero before we start worrying that it’s gotten out of control. I don’t think that’s too much to ask.
Well, I was gonna say it wasn’t quite at zero, but yes, it is, for April, which would make it -0.1 for May. Compound annual rate for 3 months is 0.9, compound annual 12 month rate is -1.3. So the three month rate is still in positive territory.
Anyways, as the man said, a lot of people are long gold and oil, and they have a strong interest in well, deflation. After losing all that money on real estate (see Niall Furgeson and his castles), deflations means he’s getting richer. And libertarians love ‘mild’ deflation. So they’d like more deflation, please.
Inflation scares are useful to change the expectations from deflation which is really, really, really, bad, to inflation which is controllable.
Only if people actually spend. If, for instance, an inflation scare causes people to pull back into treasuries, or to buy more gold, or to oppose government spending, then you have people scared of inflation while undergoing deflation.
Which is totally fucking useless, you will note.
max
['That's ok, though, come September, the entire mess starts up again, and once again, cries of 'SELL SELL' will be heard through the land.']
June 16th, 2009 at 9:51 am
Not only that, but a huge majority of people “worried” about inflation are highly educated free market types. They are 100% familiar with rational expectations theory and the Efficient market hypothesis as they form a huge part of the cannon of free market beliefs.
If these two theories are true, then we would see the inflation reflected in current market prices. Future inflation is is not reflected in current market prices, so either they are:
1. Stupid
2. Lying
they are not stupid people, therefore they must be lying.
June 16th, 2009 at 9:52 am
That’s ridiculous. Inflation scares are useful for getting people to put pressure on government to stop spending. Government spending is the proper response to threats of deflation. The inflation fearmongering is one more tool the right is using to fight against progressive policies. To pass it off as some hush-hush tactic being employed for the public good is complete nonsense that no one could possibly believe.
June 16th, 2009 at 9:52 am
I think the inflation rate should at least be above zero…
It is.
The rate (and this was the producer rate) was 0.2%, or 2.4% (approx) annualized. That the increase was basically for energy and food doesn’t mean that there wasn’t an increase.
June 16th, 2009 at 9:55 am
By the way, if you are looking for a crude but simple measure of current inflation expectations over a given future period, you can compare nominal Treasuries to TIPS with the same maturity.
For example, here is the TIPS yield curve for 6/15/09 (5 yr, 7 yr, 10 yr, 20 yr):
1.15% 1.48% 1.90% 2.44%
And here is the nominal Treasury yield curve for 6/15/09 (same maturities):
2.75% 3.39% 3.76% 4.58%
Do the math, and you get the following expected inflation rates over those periods:
1.60% 1.91% 1.86% 2.14%
Again, this is a somewhat crude measure, but suffice it to say that there isn’t anything to be particularly scared about here.
June 16th, 2009 at 10:00 am
I understand that this index does not count food and energy costs. But I don’t think it is very honest. This is where it hurts the most and it is very very noticeable. I buy more or less the same stuff week in and week out when food shopping. Yet my food expenses grew significantly in the last several years. Who cares that TV prices are going down. You can’t eat TV. I lived through inflation in Russia in the early nineties. And this was a horrible experience. Your life savings disappear. Your paycheck can buy less and less. Employed people did not have enough money to buy food. My friend’s “middle-class” family lived on potatoes from their dacha for a year. Meat was a luxury. Of course, I don’t have economical education so I might not understand that this is all good.
June 16th, 2009 at 10:01 am
11: You can also look at European yield curves in comparison to Treasuries, since the EU central bank is holding things down tight to prevent inflation. I don’t have the numbers to hand, but they show a similar lack of expectation of inflation in the US.
June 16th, 2009 at 10:08 am
I understand that this index does not count food and energy costs. But I don’t think it is very honest. This is where it hurts the most and it is very very noticeable. I buy more or less the same stuff week in and week out when food shopping. Yet my food expenses grew significantly in the last several years. Who cares that TV prices are going down. You can’t eat TV.
As a wise person once wrote: “But of course the fact that food and energy aren’t part of “core” inflation doesn’t mean they aren’t real, or don’t matter to people’s lives.”
June 16th, 2009 at 10:10 am
Anyone who’s been to a grocery store in the last little while just laughs at the notion that there’s no inflation in food prices. I do the shopping here, and last week a basket of 33 items – none of them luxury goods – cost me $200 at Giant Food. The same sort of goods were well under $150 at the end of 2008. There’s inflation all right – we just have lying stats and gullible fools like Yglesias who believe them.
June 16th, 2009 at 10:12 am
I’d disagree, somewhat.
I don’t think there needs to be fear-mongering about inflation. But, reasonable people should explain that inflation is likely to result — and that it’s the least worst option.
I’ll use an analogy to explain what I mean, because they are never really accurate.
1) A guy has cancer, but chemo gets it out (Chemo is our current stimulative policies)
2) Now, I’m sick and having other awful side-effects (inflation).
3) But, it was worth it! And, the side-effects are manageable — unlike the initial problem.
So, yes. There may be side-effects (inflation), but they are less-awful and much more manageable with more standard monetary policy (increasing interst rates).
Another analogy would be correcting yourself when your car fishtails. You oversteer to get back on track, then need another correction in the opposite direction.
So, it all seems logically fine to correct the initial condition first…
June 16th, 2009 at 10:24 am
Yeah, “core inflation” is sort of “inflation ex-inflation”. The argument for excluding them is that food & energy prices tend to be more volatile than anything else in the CPI basket, but that could easily be handled by smoothing those numbers over three months or six months.
Harper’s mentioned this a year or two ago: There is a deeply embedded institutional bias to understate inflation, since CPI is tied to pensions and lots of other entitlements. The inflation statistic itself is highly political, and if you ask me, it should be a working-class measure, not a middle-class measure. But statistical hand-waving like hedonic pricing and substitutions means that your upper-middle-class professional doesn’t have to worry about the price of milk, because hey, at least iPhones are cheaper than they used to me.
June 16th, 2009 at 10:24 am
cheaper than they used to *be*, even. I ought to be forced to hit Preview every time I comment.
June 16th, 2009 at 10:32 am
What Francis said. The everyday price of food has gone up a lot in the last few months, along with the price of gas. This seems to mostly be due to the falling value of the dollar rather than due to any real supply problems – which points right smack at the inflation that Matt thinks isn’t happening.
Part of the reason this is confusing is that housing prices are in free fall, as the ridiculous price increases of the last decade correct. That makes a lot of people – including the Fed, it seems – think that there’s no inflation, and that deflation is a risk. Those people need to fire their personal assistants and start visiting grocery stores themselves, in order to get the heck out of the bubble universe they live in…
June 16th, 2009 at 11:11 am
I think the inflation rate should at least be above zero before we start worrying that it’s gotten out of control.
It is above zero, stop being an economic dumbass. The core inflation measure is flat, but PPI is positive and energy costs are way up.
I think the inflation rate should at least be above zero before we start worrying that it’s gotten out of control. I don’t think that’s too much to ask.
This is like saying circa 2006, “I think housing prices should at least start falling a little bit before we start worrying about a massive crash. I don’t think that’s too much to ask.”
Quit insulting your readers with ridiculous economics posts.
June 16th, 2009 at 11:11 am
It is one thing to note food prices should be included in broad inflation measures, at least on a smoothed basis. It is another thing to imply that food prices are the only relevant measure of inflation, or in particular the only relevant measure of deflationary risk.
June 16th, 2009 at 11:15 am
What Njori said.
We can choose the path of trying to spend our way of recession or trying to save our way out of recession, that is, do we follow Jamie Galbraith or Mark Sanford? Anyone worried about inflation in this economy is clearly on Team Sanford.
June 16th, 2009 at 11:15 am
Energy and food costs are reflected in measured core inflation, just over time. If diesel goes up 30% one month, it will eventually be reflected in the price of every item that is hauled by truck. But usually, some of the cost is absorbed and does not reach the consumer.
What CPI does not do is calculate the growth in house prices. So, it was showing less than obvious inflation in 2004-2007, but it is now actually showing more inflation (less deflation). House prices have dropped 20-60% across the country in 12 months and CPI is up or down 1%?
June 16th, 2009 at 11:18 am
We owe a lot of money to other nations who aren’t exactly happy with our fiscal and monetary policy (i.e., keep running up the debt, and print what we cannot borrow). We also purchase a key national resource (oil) from other nations who are also none too happy selling us their dwindling source of income for our tiny bits of paper.
You can’t print your way out of a crises.
We’re closer to 1970s US (or maybe even Weimer Germany) then 1990s Japan. Japan at least had exports and managed to keep their Yen strong.
Oh, i loved how Krugman wrote one of his “there’s no inflation” rants in the NYTimes a few weeks ago and then three days later the price of that paper is inflated 33%.
June 16th, 2009 at 11:26 am
Oh, i loved how Krugman wrote one of his “there’s no inflation” rants in the NYTimes a few weeks ago and then three days later the price of that paper is inflated 33%.
I know a 300 lb. chain-smoking cardiologist. So medicine is a fraud.
June 16th, 2009 at 11:31 am
Food prices are determined by oil prices. It costs a lot of money to transport food. Food prices are raised to offset costs from gas prices.
June 16th, 2009 at 11:38 am
The main thing is, everyone uses food and fuel all the time – even mass transit riders are indirect users of fuel. The notion that these “don’t matter that much” is some kind of weird affectation of utterly disconnected people….
June 16th, 2009 at 11:49 am
Do the math, and you get the following expected inflation rates over those periods:
1.60% 1.91% 1.86% 2.14%
Again, this is a somewhat crude measure, but suffice it to say that there isn’t anything to be particularly scared about here.
It’s a clever sleight-of-hand, but you neglected to point out the safety considerations that are significantly depressing Treasury yields right now. The 10 and 7 years should be at least 5%, given the parlous American fiscal state.
Every single one of my friend has been long TBT since last year, and every single one has been in the black. I suspect a slight Treasury collapse might be in order when Mr Obama pushes through his (costly) health and other programs.
June 16th, 2009 at 11:51 am
It’s a funny thing really; what might ultimately stop Mr Obama’s social programs dead in their tracks might not be feckless and inept Republican politicians, but the bond market and the Chinese. The irony is delicious.
June 16th, 2009 at 12:35 pm
Maybe the inflation scare mongers live in Washington DC where the unemployment rate is 6%, vs 10% for the rest of the nations. So, yes, in Washington there is a wage price spiral going on.
June 16th, 2009 at 12:51 pm
Can i call the other people “inflation deniers?”
To assume that the only way out of this mess – which was caused by easy money – is with more easy money is one thing (and it may actually be correct) – but to mock cautious people who are concerned that the current monetary/fiscal policies will lead to more bubbles or inflation is a bit much.
If i were a gambler, i’d wage a few of you more adamant “deniers” were furious back in 2005 if anyone dared claim that house prices can actually go down.
“WHA!!! SCARE MONGER! House prices are going up! Stop fear mongering about something that’s not happening!”
How’d that work out for ya…?
June 16th, 2009 at 12:52 pm
This is my third try posting this thought:
It’s a clever sleight-of-hand, but you neglected to point out the safety considerations that are significantly depressing Treasury yields right now.
TIPS are Treasuries too, and if anything the TIPS yield is a bit low (assuming TIPS investors value the unexpected inflation protection).
June 16th, 2009 at 12:54 pm
There is a substantial class of affluent individuals who like recessions just fine. Completely divorced from the unpleasant fear of losing their jobs or their homes, they find recessions an opportunity to buy stuff on the cheap and keep the hired help in line. These people are more annoyed by inflation, taxes and “socialism” than they are threatened by unemployment or foreclosure.
Quite apart from its direct erosion of the value of stagnant pools of cash, inflation is also a convenient political argument against full employment policies that annoy conservatives for other reasons.
June 16th, 2009 at 1:05 pm
Aatos, inflationary policies can help the wealthy (i.e., people who are speculating), while they can destroy people on fixed incomes, the lower class and aren’t especially helpful to the middle class.
I’m certain you’ve noticed that prices are rising right now, for food, for health care, for education, for gas. Do the wealthy care about paying an extra buck for gas and a 25% increase in the price of bread? Of course not. However they DO care if the stock market drops 25 points. As long as there’s enough monopoly money floating around to keep the markets frothing the wealthy are doing great. The rest of us? Maybe not so much.
June 16th, 2009 at 1:14 pm
Whoops, I commented imprecisely. Please just mentally regard my unverifiable accusation that rich people like recessions just fine, as shorthand for the observation that recessions are compatible with their rational self interest.
Which even fails as shorthand, since it’s only a couple words shorter. Sorry.
June 16th, 2009 at 1:32 pm
Hankest,
You’re right that inflation of stock is the expectation of everyone who buys and owns it, but that is not the same thing as general inflation increasing the price of everything. Bankers care very much about what the dollar they lend out today is going to be worth 15 or 30 years in the future.
But quite apart from that, inflation is a convenient argument for people who really just don’t want to pay taxes for anything.
OK off to work now….
June 16th, 2009 at 2:43 pm
Hankest,
If i were a gambler, i’d wage a few of you more adamant “deniers” were furious back in 2005 if anyone dared claim that house prices can actually go down.
“WHA!!! SCARE MONGER! House prices are going up! Stop fear mongering about something that’s not happening!”
How’d that work out for ya…?
That was about a bubble, not inflation. Inflation can be a problem but now the problem is deflation which in part was caused by the bubble popping.
Brent:
Another bubble, however, kind of worries me. Keep the spicket flowing too fast for too long and of course things could get bubbletastic again. Maybe that’s an argument for better regulation. Or maybe that’s an argument for the Fed to figure out how to delicately pop a bubble before it gets too big. Or maybe it’s a bigger problem, going back to Matt’s post yesterday about income stagnation. I don’t know.
Exactly what I’m thinking, except maybe as the Onion put it we do need another bubbletastic expansion.
Many people will soon forget about this past bubble, like a child who forgets a ball exists after it rolls behind a couch, and will be easily conned into another one.
June 16th, 2009 at 2:44 pm
TIPS are Treasuries too, and if anything the TIPS yield is a bit low (assuming TIPS investors value the unexpected inflation protection).
Yes, but if you are smart money, the whole point of being smart money is to be able to discount for inflation expectations. Which is to say, TIPS isn’t a smart money play, it’s a safety play. And safety plays equal low yields.
If they are really smart investors, they hedge with short instruments, like TBT, which is a double short, not inflation-protected securities. The official bureau congenitally under-report inflation anyways, so TIPS is really not very good inflation protection.
There is also the arbitraging the yield curve as a play on inflation expectations, and so on; TIPS really is for amateurs, orphans, and widows.
June 16th, 2009 at 2:45 pm
Generally, during inflation, wages keep pace with prices. It’s far from universally true, but it is the starting point of inflationary assumptions. Inflation generally helps the middle class. Middle class people tend to have large, fixed-rate debts, and have the bulk of their assets in intrinsically valued form – a home, a car, a degree, years of experience etc, indexed pensions. Their debts become relatively smaller, while their assets keep pace with inflation.
Rich people tend to have a lot of money owed to them at fixed interest rates. They have luxury assets which do not scale with inflation as well as more practical assets.
Poor people do OK when inflation is spurred by labor shortages. They do badly when inflation is spurred by material shortages.
June 16th, 2009 at 2:48 pm
One sort of revelation I’ve had recently is that the Germans and the European Central Bank are more afraid of inflation because they are much more susceptable to a wage-price spiral than we are b/c of their more equitable labor laws and stronger unions. I used to think their irrational fear was kind of weird.
The one extremely small consolation of a weak labor movement is that it makes an inflationary wage-price spiral pretty unlikely.
June 16th, 2009 at 2:52 pm
if anything the TIPS yield is a bit low (assuming TIPS investors value the unexpected inflation protection).
And this sentence is just puzzling. Investors value inflation protection. They go for TIPS, bid the price of the security up, which means the yield goes down.
I don’t see how that does not make perfect sense, even though, as I have noted, TIPS is a piece of bullshit when it comes to inflation protection, because the government always fudges its numbers when it comes to inflation.
You want genuine inflation protection, you buy blue-chip dividend stocks. Bonds are generally good for arbitrage and arbitrage only.
June 16th, 2009 at 3:39 pm
Poptarts: Another reason the Germans are so scared of inflation is that the last time they had hyper-inflation, the Nazis took control.
June 16th, 2009 at 4:59 pm
Which is to say, TIPS isn’t a smart money play, it’s a safety play. And safety plays equal low yields. . . . Investors value inflation protection. They go for TIPS, bid the price of the security up, which means the yield goes down.
Right, which was my point. So, if you calculate expected inflation by subtracting the TIPS yield from the equivalent nominal Treasury yield, you are slightly overestimating expected inflation because you haven’t yet removed the premium being paid for the unexpected inflation insurance. Therefore, if anything, there is even less cause for concern based on current market expectations for inflation than I previously suggested.
By the way, none of this has anything to do with whether TIPS are a good investment.
June 16th, 2009 at 6:37 pm
So, if you calculate expected inflation by subtracting the TIPS yield from the equivalent nominal Treasury yield, you are slightly overestimating expected inflation because you haven’t yet removed the premium being paid for the unexpected inflation insurance. Therefore, if anything, there is even less cause for concern based on current market expectations for inflation than I previously suggested.
Sure, but I suspect the spike in TIPS prices has been a lot less dramatic than in Treasuries, which is a much more liquid, smart-money, park-your-money-for-the-quarter sort of market.
To simplify; TIPS is always a safety play, same crowd, widows & orphans, etc., whereas Treasuries absorb money during times of distress that would have been in equities. So Treasury prices should have been driven up a lot more (and yields the other way), because of the lots more short-term, safe-harbor smart money that’s rushing into it. The composition of the TIPS market doesn’t shift as seriously and pro-cyclically as Treasuries, so the parallel downward pressure in rates should have been lesser on TIPS than on Treasuries.
And I am astounded that you are still wondering whether TIPS is a good investment; dude, haven’t you noticed? The U.S. government has never not under-reported inflation. This stuff is worse than inflation indexing; it’s inflation indexing on Treasuries, which are really supposed to be short-term and arbitrage plays, not long-term investments.
June 16th, 2009 at 6:39 pm
And a lot of the funds buying the Treasuries buy them because they don’t have a choice, more than anything else. Have you seen the yield curve? It’s all short-term play right now.
June 16th, 2009 at 6:56 pm
And by the way:
1.60% 1.91% 1.86% 2.14%
According to your calculations, the 10-year expectation is 186. Do you seriously believe that?
The truth of the matter is, the whole thing about Treasury yields is complete BS. It’s the Chinese who are propping the junk up (keeping the RMB down) and essentially being the suckers for federal deficit spending. I don’t even know why the Treasuries can be considered accurate barometers of mood, because it’s just the Asians being complete suckers and everybody else along for the ride.
Right now, Treasuries 10-year are only 26 basis points above the ultra-safe Bund and 16 bps above “petrodollar” Canadian treasuries. You can see how nutty this is. There is no risk of default, that’s sure, but stealth default through devaluation is not unlikely. Again, this isn’t the bond market being real; this is the Asians propping the junk up.
June 16th, 2009 at 8:50 pm
Sure, but I suspect the spike in TIPS prices has been a lot less dramatic than in Treasuries, which is a much more liquid, smart-money, park-your-money-for-the-quarter sort of market.
Bad guess. The yield on the 5-year TIPS was 4.17% on 11/28/08. On 12/01/08, the next trading day, it was 2.03%. It doesn’t get much more dramatic than that. What happened, by the way, was a spike in deflation fears in November that briefly inverted the TIPS yield curve.
The composition of the TIPS market doesn’t shift as seriously and pro-cyclically as Treasuries, so the parallel downward pressure in rates should have been lesser on TIPS than on Treasuries.
Yeah, you’re just making stuff up at this point. The TIPS market swung wildly as deflation fears slammed into the general flight to Treasuries, and quickly the general flight to Treasuries won out: from the aforementioned spike up above 4% on the shorter end in November, by the end of March the 5-year TIPS was down below 1%. Sounds like your widows and orphans suddenly found a bunch of cash lying around.
And I am astounded that you are still wondering whether TIPS is a good investment
I didn’t say I was wondering. I said it was irrelevant to the discussion we were having.
Have you seen the yield curve? It’s all short-term play right now.
And the same curve has shown up in TIPS, further confirming that you have no idea what you are talking about when it comes to TIPS.
According to your calculations, the 10-year expectation is 186. Do you seriously believe that?
I’m saying that is what the market for Treasuries is telling us about current expectations, within a small margin of error. You can believe whatever you would like.
Again, this isn’t the bond market being real; this is the Asians propping the junk up.
And again, the same yield curve has shown up in TIPS, so regardless of whether or not you feel the real yield on both TIPS and nominal Treasuries is artificially low, that has nothing to do with the conversation we are (or, at this point, were) having.
June 16th, 2009 at 11:12 pm
And again, the same yield curve has shown up in TIPS, so regardless of whether or not you feel the real yield on both TIPS and nominal Treasuries is artificially low, that has nothing to do with the conversation we are (or, at this point, were) having.
Striking. I have actually never encountered TIPS before, given that none my buddies deal with it; but still, this whole thing is a complete fuzz. How the hell the bond market can give a mathematical expression of 186 bps 10-yr inflation is utterly beyond me, because it’s clearly nonsensical.
I still think the Treasury yield has to spike at some point; right now the borrowing costs are just laughable given the risk of default-by-devaluation, which are phenomenal.
Personally, I don’t think Barack Obama will push Bernanke over the cliff on this one (engineering inflation and devaluation), and Bernanke certainly isn’t the type to be cavalier about monetary policy, but you never know. If Summers gets in come next term, you never know what the man will do.
June 16th, 2009 at 11:14 pm
Guess it’s high time to hedge against currency risk by buying foreign ADRs and by getting some out of USD.
June 16th, 2009 at 11:24 pm
Got it: CurrencyShares, that’s what I meant. Was trying to remember the name the entire time.
June 17th, 2009 at 2:10 am
Inflation isn’t happening, they say. Hahahaha!
I’ll bet Bernanke is having a good, full-bellied laugh through his prickly little beard over this one: “Hey, guys,” he’s saying, slightly buzzed. “Let’s double the money supply again this year! It was so much fun last year, and I’ll bet that that Yglesias and his self-important fanboys will never even notice! Hahahaha!”
Usually, the more you have of something, the less it is worth. I say “usually,” because this rule doesn’t apply if you’re a Keynesian brainfuck–in that case, it doesn’t matter how much money you create, so long as you say “inflation isn’t happening,” then it must not be happening! Nevermind that the dollar has lost 96% of its buying power since the Fed took control in 1913! That’s all stopped now, because Abraham Delano Messiah Obama the First, Emperor of the World, is the one printing the cash!
Hahahaha! Keynesianism is hilarious!
June 17th, 2009 at 7:10 am
Re: Anyone who’s been to a grocery store in the last little while just laughs at the notion that there’s no inflation in food prices.
I don’t laugh at the idea, because overall food prices have been gone down this year, after a bit of a spike last year. This has primarily affected fresh foods and meat, and to a lesser extent dairy. Processed foods are still high, which probably reflects the lingering costs if last year price spike. And when considering prices don’t forget to include the temporary price custs in sales– rather than lower prices permanently this is how prices are generally cut these days with stores doing rolling price cuts so you can buy a pepsi 2 liter for 0.75 or salad dressing for a dollar in a given week.
Re: …cost me $200 at Giant Food.
If that’s the same Giant we have here in Baltimore they are an expensive place to shop. Even their sale prices are high. Don’t shop there, íf you have a choice.
June 18th, 2009 at 1:53 am
James correctly observes that, “everyone uses food and fuel all the time – even mass transit riders are indirect users of fuel. The notion that these “don’t matter that much” is some kind of weird affectation of utterly disconnected people….”
Add to that the pending per capita tax burden imposed on fossil fuel consumption by pending ‘Cap & Trade’ legislation and you’ve got another Obama contribution to future inflation (environmental protection) that will reportedly make the United States “the cleanest third world nation on earth.”