MAKING THE CURRENT REAL INTEREST RATE USURIOUS:

Wholesale inflation jumps sharply in December (Martin Crutsinger, January 13, 2006, AP)

For all of 2005, wholesale prices rose by 5.4 percent. That was the biggest increase since a 5.7 percent increase in 1990, and another year in which surging oil costs pushed inflation higher. However, core inflation, excluding energy and food, was up a more moderate 1.7 percent in 2005, including a tiny 0.1 percent increase in December.

Factor in the government's problem with consistently overstating inflation and you've got a Fed rate about 4 points higher than the inflation rate.

Posted by Orrin Judd at January 13, 2006 3:36 PM