Inflation

This is a quote from an article I read this morning.  It was written by Jennifer Aversa,( AP Economics Writer,) about the Fed, Ben Bernanke latest statement and the possible/probable interest rate cut expected March 18th. 

“The Fed forecasts that inflation will moderate this year compared with last year. But the Fed’s recently revised inflation projection of an increase between 2.1 percent and 2.4 percent is higher than its old forecast from the fall.

Bernanke said there are “slightly greater upside risks” that inflation could turn out to be higher than the Fed currently anticipates, given the recent run-up in energy and food prices.”

I read this article and I thought, yeah...they’ve increased the inflation projection all the way up to 2.1% and 2.4%.  So, the Fed is copping to the fact that inflation is increasing, but I think they are off a little bit with the numbers. 

Let me share with you some numbers that Richard Russell, of the Dow Theory Letters, put out last Thursday in his Daily Remarks.

“With the big stock averages milling around above their January lows and with the cost of living surging, the word now is “stagflation”—the economy going nowhere while prices are rising. This is one of the worst situations for the poor consumer.

But what about inflation? Oh well, hope for the best—and continue feeding the public those phony “core inflation” figures”

Moderate? Ben Bernanke and the Feds think inflation will moderate?  Doesn’t look that way to me.  Not to mention, gold and silver have gone crazy since last Thursday when Richard Russell posted these remarks.  And the increases that Richard Russell is talking about is just the increases that have occurred in the last two months.  I don’t want to even contemplate how much more the cost of a cup of coffee, a loaf of bread, a tank of gas is going to cost us by the time we finish out this year. 

Posted by Meg Tilly on Wednesday, February 27, 2008 in

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