The “hard spot” faced by the Fed, as we pointed out yesterday , is the fact that the market forced the fed funds rate down 3/4 of a point last week in response to the credit crisis on Wall Street.
Now, the “granite facade”: inflation.
Our friend John Williams from ShadowStats.com recently applied 1980s style accounting methods to the current inflation stats and, well… it’s a doozie:
The blue line shows inflation if you used traditional methods for measuring inflation going back to 1980, before the Bureau of Labor starting monkeying with “hedonic” price adjustments.
Here’s the rub. If the Fed continues to buckle to Wall Street’s demand for cheaper credit, inflation will continue to rise unabated. The victim in all this is sitting in your wallet with a smiling George Washington printed on it in green.
Now, the “granite facade”: inflation.
Our friend John Williams from ShadowStats.com recently applied 1980s style accounting methods to the current inflation stats and, well… it’s a doozie:
The blue line shows inflation if you used traditional methods for measuring inflation going back to 1980, before the Bureau of Labor starting monkeying with “hedonic” price adjustments.
Here’s the rub. If the Fed continues to buckle to Wall Street’s demand for cheaper credit, inflation will continue to rise unabated. The victim in all this is sitting in your wallet with a smiling George Washington printed on it in green.
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