Wednesday, 27 February 2008

Linkage

Inflation begins to get MSM notice, film at 11


Wall Street Journal oped page:

Inflation May Be Worse Than We Think
By DAVID RANSON

...The "core" CPI that excludes energy and food shows a 12-month rise of 2.5%...

Historical CPI data in the U.S. are complicated by occasional changes in the methodology the government uses to calculate the index. In the late 1990s, one of these changes reduced the reported inflation rate significantly. But taken as a whole, the relationship suggests my following rule of thumb to estimate CPI inflation at any time: Divide the percentage change in the gold price from eight years in the past by 80, and add three. This rule of thumb has largely worked over the past several decades. In the last eight years the price of gold has risen 225%. The rule therefore comes out with an answer that puts inflation a lot closer to 6% than 4%.

National Review
online: Kudlow's Money Politics:
...Since the summer of 2007 — and especially in recent months — there has been an alarming rise of inflation.

Economist Brian Wesbury says the Fed is in denial about rising prices. I think he’s right...

...using the so-called core inflation rate (which excludes food and energy) simply makes no sense over longer periods of time. In other words, core prices from month to month, and quarter to quarter, may be useful guides for the Fed, but they are no longer useful over periods of 12 months or longer. The rise of inflation, measured as a 12-month change, is truly significant over the past 4 months...

Incidentally, one of the reasons why voters are so negative on the economy is the increase in the price of energy, gasoline, oil, home heating fuels, and food.
Can you say “stagflation,” boys and girls? And would President O'Clinton pull a Nixon and say, “wage and price controls?”

This is nothing new. What’s important is that it’s beginning to get coverage outside of the blogosphere.


Previously.

Posted by: Old Grouch in Linkage at 16:24:17 GMT | No Comments | Add Comment
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