December 21, 2005


If Inflation Falls in the Forest…: If we listened to the media, no one would have heard the biggest price decline in 56 years. (Noel Sheppard, Dec. 21, 2005, Free Market Project)

Ever since Hurricane Katrina made landfall in late August sending oil prices to $70 per barrel and gasoline above $3 a gallon, the media have been in a panic over a return of ’70s-style inflation. Such concerns reached a fevered-pitch in October when a gauge of consumer prices rose by the largest amount in 25 years. Yet, when the Labor Department released numbers last week showing that inflation had declined by the greatest percentage in 56 years, rather than using this data to ease the public’s concerns about rising prices, the press either downplayed the report or totally ignored it. [...]

America has been in a disinflationary cycle since the early ’80s, with a few very short-lived spurts of above-trend price rises since. Yet, the thought of a return to ’70s-style stagflation strikes fear into all who lived through it. As a result, the press have a solemn responsibility to report these figures to the public in as impartial and factual a manner as possible…or is that asking too much?

Which is why the Fed Chairman should be someone who was no more than a minor in the 70s.

Posted by Orrin Judd at December 21, 2005 6:55 PM

Bucking for the job?

Posted by: David Cohen at December 21, 2005 7:54 PM

A retired economics professor I know told a lunch group today that this was dramatic confirmation that we are in a secular (i.e., long-term, or fundamental) deflationary trend, which he, like OJ, has been saying for a good while. Right now, around here, the only exception I see is in building materials, the costs increases there are driving folks nuts, and cuased one developer I know to return deposits on a condo project-- first time he has done that in 15 years.

Posted by: Dan at December 21, 2005 9:07 PM

They are living in the 70's like the generation before them was living in the 30's. They cannot get past the experiences of their youth and acknowledge the world has changed.

Posted by: Mikey at December 22, 2005 9:51 AM

An astrologer on Fox News last night predicted that by July '06, gold prices will soar, the markets will tank and a recession will follow.

He claims he not only looks at the astrological signs, but economic indicators as well.

Sounds like wishful thinking?

Posted by: erp at December 22, 2005 10:20 AM

The media likes inflation, because it neuters the government, no matter who is in power.

Posted by: jim hamlen at December 22, 2005 11:51 AM
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