Dec 03 2008 - Town Hall
by John Stossel
If an athlete injures himself and suffers great pain, we'd recognize the shortsightedness of giving him painkillers to keep him going. The pain might be masked, but at the risk of greater injury later.
That's a good analogy for the inflationary policies now pursued by Washington. These policies may temporarily "stimulate the economy," but they also disguise and aggravate the underlying problems. We will all pay a serious price.
Policy makers have thrown caution to the wind. Twelve–digit dollar figures are tossed about casually. The other day, after Treasury Secretary Henry Paulson changed course –– yet again –– and announced that the Federal Reserve would commit $800 billion more in "new loans and debt purchases," The New York Times reported, "Fed and Treasury officials made it clear that the sky was the limit."
The total federal commitment to date is over $7 trillion.
Jan 04 2009 - City Journal
by Dane Stangler
The Great Inflation and Its Aftermath: The Past and Future of American Affluence, by Robert J. Samuelson (Random House, 336 pp., $26)
In conventional telling, postwar American history resembles thermodynamics: action and reaction ad infinitum. The dull Eisenhower years gave way to the optimism of the John F. Kennedy and Lyndon Johnson administrations. Student movements (in reaction to the Vietnam War) and race riots of the 1960s exploded into chaos, out of which Richard Nixon emerged, promising order only to give us Watergate. This ushered in the malaise–ridden cardigan presidency of Jimmy Carter, which then propelled Ronald Reagan and conservatism to power. And so on.
President–elect Barack Obama promises deliverance from this combustible cycle. Before he sets out to fulfill this pledge, however, he may want to read Robert Samuelson’s new book. The Great Inflation and Its Aftermath is revisionist history like it ought to be. Samuelson, a Washington Post and Newsweek columnist, downplays some conventional elements, resurrects others long forgotten or ignored, and weaves them all into a compelling—and instructive—narrative.
Aug 29 2008 - Washington Times
Consumer spending increased in July, but prices increased even more, suggesting that the growth rate of consumption, the linchpin of the U.S. economy that accounts for more than 70 percent of gross domestic product (GDP), may be turning negative in the third quarter. In fact, July was the second consecutive month that real (price–adjusted) consumer spending declined, the Commerce Department reported Friday.
Jul 14 2008 - American Enterprise Institute
by Kevin A. Hassett
If you are like me, the notion that inflation could climb to double digits seems almost absurd. But have years of U.S. Federal Reserve success lulled us all into a false sense of security?
Economists tend to be cautious about the things they say in public. If, heaven forbid, you find yourself in a room filled with dismal scientists this month, you are likely to hear whispered private conversations that become almost apocalyptic about inflation.
Jul 05 2008 - American Enterprise Institute
by Kevin A. Hassett
If you are like me, the notion that inflation could climb to double digits seems almost absurd. But have years of U.S. Federal Reserve success lulled us all into a false sense of security?
Economists tend to be cautious about the things they say in public. If, heaven forbid, you find yourself in a room filled with dismal scientists this month, you are likely to hear whispered private conversations that become almost apocalyptic about inflation.
It is by no means certain that the worst will happen, but if it does, the economic consequences could be, as they were in the early–1980s, crushing for an already weak economy.
Jun 13 2008 - Washington Times
WASHINGTON (AP) – Inflation shot up in May at the fastest pace in six months, pushed higher by soaring costs for gasoline and other types of energy.
The Labor Department reported Friday that consumer prices rose by 0.6 percent last month, the biggest one–month increase since last November, as gasoline costs surged by 5.7 percent. Food prices, which have also been rising sharply, were up 0.3 percent as the cost of beef and bakery products showed big gains.
May 31 2008 - American Enterprise Institute
by David Frum
The late 1960s were a tough time to be a kid. There was a time that you could buy a bag of potato chips for a nickel. Then the bag cost a dime. Then 15ยข.
It took a lot of growing up to understand what was really happening: It wasn't the cost of potato chips that was going up. It was the value of money that was going down.
May 29 2008 - Seattle PI
by CHI-DOOH LI
As I stood at the gas pump the other day filling up the fuel tank of my 2002 Sebring with $4+ per gallon regular gasoline, my mind wandered to what it was like 40 years ago in 1968, when regular–grade gasoline cost a piddling 30 cents per gallon.
Back then the attendant pumped the gas for you, wiped the bugs off your windshield and checked your oil level and tire pressure. After accepting $4 for the entire fill–up, the attendant would offer you an array of gifts to choose from –– blankets, dishes, tableware, glasses. My wife and I still use the flower–pattern dishes we accumulated when I was a law student and she was a beginning teacher in the Seattle Public Schools. A set of plastic–handle steak knives lasted us around 30 years.
May 25 2008 - Seattle PI
by THE ECONOMIST
Ronald Reagan once described inflation as being "as violent as a mugger, as frightening as an armed robber and as deadly as a hit–man." Until recently, central bankers thought that this thug had been locked up for life. Thanks to sound monetary policies, inflation worldwide had stayed low in recent years. But the mugger is back on the prowl.
Even though America is close to recession and growth in other developed economies has slowed, inflation is rising.
May 12 2008 - San Francisco Chronicle
The cost of mailing a letter goes up a penny to 42 cents on Monday, the latest in what are expected to be annual price adjustments by the Postal Service.
Mar 25 2008 - Town Hall
by Rich Lowry
Beneath the headlines of Wall Street's financial crisis lurks the economic killer for ordinary Americans –– inflation.
It steals from the pocketbook of every American consumer, in an across–the–board regressive tax hitting especially hard those who spend most of their income on food and energy. It cuts into profits and washes away savings. And it has a self–perpetuating dynamic –– once people become habituated to inflation, it's devilishly hard to stamp out.
Jul 14 2007 - Seattle PI
by BONNIE ERBE
I usually try to be timely, but this week in this column I admit I'm way behind. I unearthed a report released more than two years ago, but which contains such informational dynamite, its contents are worth dissecting even two years hence. So here goes.
I've often wondered why inflation is so clearly rampaging well beyond levels reported by the federal government. Case in point: On a fairly regular basis I buy 10–pound bags of carrots at my local Harris Teeter grocery store. When I started buying them two summers ago, a 10–pound bag was retailing for $3.99. It is now selling for $5.99.
Editor's Comments:
I think Bonnie better stay out of economics and logic, this story shows her lack of knowledge in either one. Somehow, she is trying to blame illegal immigrants for inflation, or at least the inflation she experiences.
First of all, she complains about the prices of carrots, having gone up 50% in two years. If immigrants were to blame, then the price of carrots would not have moved because the low labor rates paid to illegals would surely keep the carrots at a low price.
Payroll numbers understate true job growth and inflation has been artificially dampened by this seemingly endless supply of low–wage workers. Ok, I'll buy that payroll numbers might understate true job growth because of illegals. Makes sense to me, but why would an endless supply of low–wage workers cause inflation?
Then she goes on: Real estate prices have been boosted by the foreign population infusion. OK, maybe so, but wouldn't that cause inflation in the government numbers. That can't be hidden in any statistic.
Here is a doozer: In other words, illegal immigration and the underground, cash economy it creates has become so powerful a force, it artificially dampens inflation rates, boosts real estate inflation (putting home ownership beyond the ken of young Americans) and reduces the wages of the average American. I won't even attempt to explain her logic in this one. I can't find any logic.
And in her final paragraph: Unfettered illegal immigration boosts inflation while hiding the effects from the general public. Makes no sense at all. If illegals are driving down the cost of labor, then the price of products is also lowered. This is the opposite of inflation. There may be bad things about illegal immigration, but inflation isn't one of them. In fact, just the opposite is true. Without illegals, our inflation might well be a problem. Still, with free trade agreements, we have many products bought in the US that are largely independent of local wages. So the issue is far more complex than Bonnie surmises.
Bill B. May
May 26 2007 - Town Hall
by Jerry Bowyer
Apr 15 2007 - American Enterprise Institute
by John H. Makin
The Federal Reserve and the Bank of Japan, arguably the world's two premiere central banks, are each risking their credibility. The BoJ is tightening monetary policy while inflation there is falling, just as the Fed hints at easing while inflation here is rising. The result could be further deflation in Japan and further inflation in the U.S.––a classic recipe for a sharply weaker dollar that could jeopardize global growth.
Apr 13 2007 - Investor's Business Daily
by Lawrence Kudlow
In my book "American Abundance," published in 1998, I talked about the Four Dead Bodies theorem of inflation. Just as you should strongly suspect murder if you discover four dead bodies in an alley, you should be very wary of future inflation if four key market–price indicators are acting in unison. These include rising gold, a soft dollar, expanding bond spreads, and strong commodities. Right now, all point to inflationary money from the Fed.
Apr 04 2007 - Investor's Business Daily
by ROBERT SAMUELSON
There must be times when Federal Reserve Chairman Ben Bernanke feels like the Wizard of Oz ? someone who's supposed to be all powerful but who's actually just an ordinary guy. Like now.
The U.S. economy has arrived at one of those moments when the Fed is expected to perform miracles. Signs of a possible recession abound, despite 4.5% unemployment.
Housing foreclosures are rising. Inventories of unsold new homes stand at eight months of sales, up from six last year. Manufacturing orders are weak; business investment dropped at an annual rate of 3% in the fourth quarter of 2006.
Mar 12 2007 - American Spectator.
by John Tamny
In a speech last week before the Stanford Institute for Economic Policy Research, Fed Chairman Ben Bernanke questioned whether increased worldwide economic integration has actually driven prices lower. Though a strong advocate of globalization and free trade, Bernanke said, "there seems to be little basis for concluding that globalization overall has significantly reduced inflation," and that, "Indeed, the opposite may be true."
Mar 03 2007
by John E. Tamny
In his book Labyrinths of Prosperity, Canadian economist Reuven Brenner noted that for measuring country–specific economic growth, "Macroeconomics is a tautology and a myth, a dangerous one at that, sustaining the illusion that prosperity is necessarily linked with territory, national units, and government spending in general." In light of the happy news that the Federal Reserve is looking to de–emphasize U.S. employment figures in measuring inflation, Brenner's words should be heeded.
As the Wall Street Journal's Greg Ip recently reported, for decades "a simple rule has governed how the Federal Reserve views the nation's economy: When unemployment falls too low, inflation goes up, and vice versa." According to Ip, Fed officials are rethinking this theory based on the belief that it "takes a far bigger change in unemployment to affect inflation than it did 25 years ago."
Oct 01 2006 - American Enterprise Institute
by John H. Makin
The central banks of the world?s two largest economies are both worried but hopeful about inflation. The Federal Reserve is afraid inflation will increase, but hopes it will decrease. The Bank of Japan is afraid it will decrease, but hopes it will increase. Ironically, the Bank of Japan says it would like to tighten monetary policy more, while the Fed says it would not.
Aug 17 2006 - Town Hall
by ALAN REYNOLDS
The core consumer price index (CPI) rose by 0.2 percent in July. The chain–weighted core CPI did not rise at all, following two months of 0.1 percent gains. Yet the fixed–weight version seemed to speed up when compared with last year. Why? Because in 2005 the comparable monthly gains averaged just 0.13 from April through September (a 1.6 percent annual rate). If the increase is the same 0.2 percent in August, the year–to–year increase will nonetheless appear to rise from 2.7 to 2.8 percent, because last year's numbers were so low.
