Inflation in U.S. Wanes?

Posted on October 16th, 2008 by bile
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The cost of living in the U.S. was unchanged in September, restrained by declines in fuel costs, automobile prices and airline fares that show the slowing economy is starting to cool inflation.

The Labor Department’s consumer price index was unchanged after a 0.1 percent drop in August; economists had forecast an increase for last month. So-called core prices, which exclude food and energy, rose 0.1 percent, also less than forecast.

Today’s figures show that for the first time in two years, prices didn’t increase for two straight months. Waning inflation gives Federal Reserve Chairman Ben S. Bernanke scope to lower interest rates further as policy makers attempt to unfreeze credit markets.

“It’ll give the Fed a little bit of cover to cut rates when they meet next,” on Oct. 28-29, John Ryding, chief economist at RDQ Economics in New York, said in an interview with Bloomberg Television.

Does this look like a wane in inflation?

Oh… they mean price inflation. Well… that will come. The wave is coming. I’d like to be upset about the impending interest drop but at this point so much money has been injected and will be injected in the future… a 0.0% rate wouldn’t make much of a difference.

Wholesale annual price inflation highest in 27 years

Posted on August 19th, 2008 by bile
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In another indication of growing inflation, wholesale prices increased in July to the highest annual rate in 27 years, according to a government report released Tuesday.

The annual Producer Price Index for finished goods rose 9.8% in the 12 months that ended in July.

The jump in wholesale prices is the fastest rate of increase since a 10.4% bump-up in June 1981, according to Joseph Kowal, economist at the Bureau of Labor Statistics.

The Labor Department also reported that PPI rose 1.2% in July, after increasing 1.8% in June. Analysts polled by had expected an increase of only 0.6%.

The surge in producer prices is in large part due to higher energy prices, said Doug Roberts, chief investment strategist for

Crude oil prices doubled in the 12 months through July, but have since fallen nearly 24% from their peak hit last month.

The latest PPI report doesn’t reflect the recent drop in crude prices, but Roberts expects future readings to ease.

“The topline is a bit behind the curve – that will fall in the future,” he said. “Right now, it has not really taken into account the recent decrease in energy prices.”

Core inflation: The so so-called core PPI number, which excludes food and energy prices, rose by 0.7% – more than the 0.2% increase analysts had expected.

The core inflation index is “the more long term rate” because it indicates how much inflation “is seeping into the economy” beyond the volatile energy prices, said Roberts.

The index for finished goods other than foods and energy has advanced by 3.5% in the past year, according to the report.

Food and energy: The indexes that measure producers’ food and energy prices increased in July, but at a more moderate pace than in the previous two months.

Energy prices rose by 3.1%, after a 6.0% jump in energy prices in June and a 4.9% jump in May. In the 12 months through July, prices for finished energy goods have surged 28%.

Food prices rose by only 0.3% in July, after increasing by 1.5% in June and 0.8% in May. In a year-over-year comparison, prices for finished consumer foods have increased by 8.7%, according to the report.

The much more moderate increase in food prices in July compared with June is the one bright spot in the otherwise glum inflation report, according to Roberts.

Even though energy prices in July were still on the rise last month, “if you are seeing the other big component of inflation go down a bit, that could indicate a positive for the future,” he said.

The government reported last week that the the Consumer Price Index jumped by 0.8% in July, which was twice the increase that economists had expected.

And don’t forget that consumer price inflation is at 5.6%. Highest in 17 years. Assuming you can trust the government’s numbers. Which you can’t. So maybe double that.

Fun isn’t it? Thank the Federal Reserve, Congress, Alan Greenspan and Ben Bernanke.

For fucks sake Bernanke!

Posted on July 15th, 2008 by bile
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Federal Reserve Chairman Ben S. Bernanke said risks to both U.S. growth and inflation have increased, abandoning officials’ June assessment that threats to the expansion had “diminished somewhat.”

There are “significant downside risks to the outlook for growth,” and “upside risks to the inflation outlook have intensified,” Bernanke said in semiannual testimony on the economy to the Senate Banking Committee in Washington.

Bernanke cited higher energy prices, reduced access to credit and a further deepening in the housing recession as dangers to growth. At the same time, he said: “We must be particularly alert to any indications, such as an erosion of longer-term inflation expectations, that the inflationary impulses from commodity prices are becoming embedded” in wages and prices.

ARGH. Way to pass the fucking buck. I’ll let Lew Rockwell speak for me:

It’s hard to be shocked at a lying federal official, but to see the head inflator, Ben Bernanke, warning the senate about inflation as if it were some extraneous force of nature is laughable. [Quoting above]

In other words, the Fed – the government agency created to inflate, and the only source of inflation – is keeping an eye on the wayward private sector, in case foolish people wake up to the Fed’s schemes, and realize they have engineered very high inflation indeed, at the same time as they have engineered a global depression, and prices zoom as the economy falls of the edge. In that case, it will be essential – from DC’s standpoint – to blame business people and consumers, so as to divert attention from their criminal selves. It is our job not to let them get away with it.

The Bloomberg article continues:

Retail sales rose 0.1 percent from the previous month, the Commerce Department reported today, less than economists forecast. Producer prices jumped 1.8 percent, the most since November, the Labor Department said. From a year ago, prices climbed 9.2 percent, a surge unseen since 1981.

Fed governors and district bank presidents now see the economy expanding 1 percent to 1.6 percent this year, up from 0.3 percent to 1.2 percent in their April outlook. Consumer prices will rise 3.8 percent to 4.2 percent this year compared with a projected range of 3.1 percent to 3.4 percent in April. The economy should expand at a 2 percent to 2.8 percent rate in 2009, identical to the April forecasts.


Anyone reading this expecting to get a >= 9.2% raise this year?

Not all this turmoil is lost on the public thankfully. I’ve gotten a chance to rant about the Federal Reserve and this economic setup, with an actual attentive audience, more often then I’ve in the past. In fact my boss was talking about picking up something to better understand the Federal Reserve System. I’m going to bring in a copy of The Case Against the Fed by Murray Rothbard. Maybe I’ll be able to get it passed around the office. It’s a pretty quick read and given the urgency which people likely feel concerning this situation it may not be a difficult sell.

What was that Ron Paul saying about inflation?

Posted on January 16th, 2008 by bile
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No wonder Ron Paul recently won the Wall Street Chatter presidential poll: he’s the only candidate who has been warning us of the threat inflation poses to our economy — a threat that looms larger every day. Now news is breaking that in 2007 wholesale prices rose at their fastest rate in 26 years. Yahoo! Finance tells the story:

The Labor Department reported that wholesale inflation was up 6.3 percent for all of 2007, reflecting a huge increase for the year in various types of energy costs ranging from gasoline to home heating oil.

And that’s not the only trouble in our economy:

The economy skidded to a virtual standstill in the final three months of last year, raising fears the country could fall into a recession, unable to withstand the multiple blows from the prolonged downturn in housing, a severe credit crisis and soaring energy costs.

Already, unemployment is rising. The jobless rate jumped to 5 percent in December, up from 4.7 percent in November. That was the biggest one-month surge in unemployment since October 2001 in the wake of the 2001 terrorist attacks.

The various economic threats have sent consumer confidence plunging and pushed the economy to the top of voters’ concerns.

How are the politicians in Washington responding to all this? They’re planning to raise our fuel taxes — by up to $0.40 a gallon over the next five years. Dr. Paul today condemned this idea in the strongest terms: “This is a great example of how out of touch big government and big business are with the American people. With gas at three dollars a gallon and a slowing economy, the last thing we need is a tax increase to be paid by Americans who can least afford it.”

Not only is inflation up but the Federal Reserve is trying to curb the crunch by making $30 billion more cheap money available and rumoring to lower interest rates by as much as 75 basis points… making even more cheap money available. Prolonging the bubble… prolonging the pain.