Misplaced Faith

Mark Thoma on inflation

I don’t believe we will see significant inflation – the Fed will not let that happen –

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Woops, I posted this on the

Woops, I posted this on the linked blog by mistake. Here is what I meant to post on this blog-

Don’t blindly accept official CPI data (inflation %). Have a look at how it is calculated now compared to the method used in the 1970’s. Using the 1970’s protocol, inflation would now be over 6% and not the sub 3% currently reported. The fiddles, (sorry, hedonistic adjustments) in the current calculation method are numerous. For example, why aren’t housing costs included?

Inflation is caused by too much money chasing too few goods. The current US deficit is running at $800 billion per year, and Greenspan is pumping liquidity into the system to fend off recession. As a result the dollar printing presses are running flat out to cover these problems. At no time in the history of the human race has any country succeeded in solving its problems with a printing press, and many have tried. I wish you luck in being the first to pull it off.

I won’t even mention the health care and pension liabilities in the pipeline, it gets too scary to think about these.

Yes, gold is strong because inflation is high and rising.

I would change Mark Thoma's comment from:
"I don't believe we will see significant inflation - the fed will not let that happen"

To:
"I don't believe we will see significant inflation for some time - the fed will hide what is happening."

I feel sorry for the people

I feel sorry for the people who would make financial decisions based on Thoma's maleducated opinions.

The CPI is an essentially

The CPI is an essentially useless tool,gold is heavily massaged by timed sales, and now they've finally got their hooks into the CRB, leaving the average person no reliable way to measure inflation. Job complete. Way to go you brave government minions. I've made A LOT of money in the last 4 years just going long ANYTHING metals or oil. It didn't take a Phd to see it coming years ago, but the average joe must not be allowed to get motivated about it. thats why the shills are in 'no inflation here' media mode. when gas hits $4 a gallon you'll be told that's deflationary or anti-inflationary or some other Orwellian newspeak term.

Considering the whole

Considering the whole purpose of the FED system is to inflate, I am skeptical.