TAKING GOLD IN THE INFLATION OLYMPICS
Friday, February 01, 2008 - FreeMarketNews.com
We still don't know which way this thing is going - the battle between greed and fear, that is. Stocks held steady yesterday. Oil too. The commodity index remains almost right on the 500 mark. Gold is sticking about $920. And yesterday, the Fed lowered its key lending rate another 50 basis points to 3%. At that level, it is substantially below the nation's inflation rate. The official inflation rate was last clocked at a little over 4%. Then, the government helpfully takes out the things that matter most - food and fuel - and comes up with a "core" rate of inflation, which is much lower. How much are consumer prices actually rising? Nobody really knows. Occasionally an economist or a newspaper will go out and buy things and then figure out how much they've gone up in price. Usually, they come up with "inflation" numbers closer to 10%. Naturally, results vary, depending on where you are and what you are buying.
We still don't know which way this thing is going - the battle between greed and fear, that is. Stocks held steady yesterday. Oil too. The commodity index remains almost right on the 500 mark. Gold is sticking about $920. And yesterday, the Fed lowered its key lending rate another 50 basis points to 3%. At that level, it is substantially below the nation's inflation rate. The official inflation rate was last clocked at a little over 4%. Then, the government helpfully takes out the things that matter most - food and fuel - and comes up with a "core" rate of inflation, which is much lower. How much are consumer prices actually rising? Nobody really knows. Occasionally an economist or a newspaper will go out and buy things and then figure out how much they've gone up in price. Usually, they come up with "inflation" numbers closer to 10%. Naturally, results vary, depending on where you are and what you are buying.
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