June 14, 2008


The Great Inflation Debate: From an economist's point of view, the "core" rate counts more than the "headline." But the Fed will have to pay attention to both (Peter Coy, 6/12/08, Business Week)

The debate over "headlline" inflation (which includes everything) and "core" inflation (which excludes food and energy) heated up on June 13 after the Bureau of Labor Statistics reported a 0.6% increase in May in the headline rate but only a 0.2% increase in the core rate, seasonally adjusted. Over the past three months, headline prices have grown at a 4.9% annual rate, while core prices have risen at an annual rate of just 1.8%. [...]

The first argument in favor of the core rate is that it tells the Federal Reserve more about what it really wants to know: the inflationary pressures within the U.S. economy. Oil and food prices tend to zoom up and down (mostly up lately) because of factors that have nothing to do with underlying conditions, such as the recent flooding of Midwest croplands or armed conflict in Nigeria's oil-producing region. Those factors come and go, so it would be a mistake for the Fed to jerk interest rates up and down in reaction to them. The Fed shouldn't start raising rates to squelch inflation until it works its way into the core rate, which is heavily affected by longer-lasting factors like workers' wage demands.

And the combination of technology, Reagan breaking the unions, immigration, and globalization means workers have no leverage to demand higher wages.

Posted by Orrin Judd at June 14, 2008 9:04 AM

"Core inflation" is another arbitrary creation of the elite/bureaucracy to keep the idiocracy paliated.

Re: Your point on workers....

So workers have no clout to demand higher wages, but due to the massive devaluation of the dollar and the blazingly stupid subsidizing of ethanol, that same worker has to pay Sheiks and Chavez 25%+ more for oil, and Corrupt Welfare Queen ADM more for corn, corn syrup, et. al.

Piling on, the reallocation of land to growing corn (reacting to subsidies) is increasing the price of other commodities.

But hey, as long as the doped white mice don't have THEIR incomes ravaged by competition and inflation, $4.50 a gallon is a small price to pay as long as it doesn't effect the price of the lawn service. (heaven forbid they have Muffy and Bif mow the lawn)

McCain in a landslide. 60-40% nation, etc. etc.

Posted by: Bruno at June 14, 2008 10:21 AM

Has to? No.

They have so much disposable income they don't mind doing so.

Posted by: oj at June 14, 2008 1:50 PM

"Core inflation" is another arbitrary creation of the elite/bureaucracy to keep the idiocracy paliated.

Or it's what should really matter to government in dealing with inflation and your either demagoguing or astonishingly ignorant about an issue that you seem to feel competent to opine on.

Posted by: Ibid at June 15, 2008 8:13 AM


I'm hardly ignorant, as I've been following the issue as well as any. If I'm ignorant, then so is Steve Forbes, who is quite an accurate, and accomplished amatuer economist.

Your position appears to be similar to OJ's. Like you and OJ, I'm doing fine, so apparently, I should just shut up and let the folks in charge run things.

Rather than call into question my competence, why not try to address the point I made. If I'm off base, I'd be glad to hear how or where.

Posted by: Bruno at June 18, 2008 1:37 PM

You use only yourself as a measure, not objective data.

Posted by: oj at June 18, 2008 2:47 PM