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Fourth echelon

While the Federal Reserve dithers, inflation is creeping ever upwards

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Reporting on the Federal Reserve’s non-committal commitment to raising interest rates is beginning to reek of desperation. Hacks (including yours truly) are practically begging for something to chew on rather than the constant “wait and see” diet served up by the Fed’s chairwoman, Janet Yellen, and her buddies.

Maybe the much-hyped rate rise will be announced in September, when the Fed’s board are due to meet again. If not, it will be December, because raising rates without giving reporters a chance to grill Ms Yellen after all this time would be an unspeakable cruelty.

Officially, the Fed is keeping rates on hold because inflation has not yet reached its target of 2 per cent, even though events in China and the eurozone might be where their real concern lies. Either way, the official rate of inflation is a handy excuse for doing nothing even if it might not be a particularly accurate reflection of the real costs of living. Which it isn’t.

It’s easy to believe that the cost of certain goods has risen slowly over the last decade, particularly for high-tech goods where manufacturing technology and outsourcing may have even resulted in some deflationary pressure. Food is surprisingly expensive in the USA, probably significantly more so than in the UK on a constant currency basis, but it’s also believable that food price inflation is reasonably low. Technology inflation is constantly changing but the shift has been where money is spent rather than the amount – more on phones with data plans, less on cable television.



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 MFWIC    6

May as well use their made up play money as toilet paper.  That's about all it's gonna be worth.  If you want a real measure of how the economy is doing, watch the commodities markets.  When trading falls through the floor on industrial basics like copper, iron, oil, and some others, its a pretty good indicator that market demand is nil, meaning that nothing is being made, because nothing is being sold.

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