THE FED RESERVE OF GROPING

A story headline in the WSJ today, " Mystery of Missing Inflation Weighs on Fed Rate Move,"  perpetuates one of today's greater myths.

There's plenty of inflation around. The only thing missing is honest, accurate ways to measure it, something you learn early on isn't in the lexicon of central bankers. And never will be. Sure oil prices are down as are prices at the gas pump. And, yes, commodity prices in general are in a slump. There's some unusually warm weather around we can all probably thank climate change for and natural gas prices reflect the weather.

But we're all paying more for lots of things the Fed and its shills don't want to include in their many phony indexes. Housing and rents are good examples. Municipal services are another. Professional license and continuing education fees, college tuitions and health care including insurance premiums are others. And there's the long standing problem of flat wages; that's inflationary. Or how about the COLA crowd who just got gypped. Talk to them; see if they think there's any inflation around.

A business acquaintance owns a scrap iron business, most of which he exports overseas. The strong dollar and low commodity prices are affecting his world and his profit margins. For him that's inflation. The cost of medicare to it recipients increases annually and by no small percentage, either. What we have here is a simple case of that old saying, it depends on whose ox is getting gored.  Federal  Reserve bureaucrats have ample reasons to gerrymander the figures. It's not just the sole province of shady politicians and their campaign managers.It's called potential chaos in paradise resulting in a possible change of the guard.

As nearly everyone knows they're lots of two provider families out there not to forget all the one-provider families daily scrapping hard to get a life. Many of them have young kids who require daycare several days a week. Talk to them about the prices of that daycare. Ask them if there's any inflation afoot.

The Journal article, however, indirectly makes our case for us.

The Fed’s poor record of predicting inflation has set off debate within the central bank over the economic models used by central bank officials. Fed Chairwoman Janet Yellen, in a 31-page September speech on the subject, acknowledged “significant uncertainty” about her prediction that inflation would rise. Conventional models, she said, have become “a subject of controversy.” 

That it took her 31 pages to say such should scare the you know what out of you. To be kind we would substitute skewed for conventional as in an agenda. And here's another interesting paragraph from the article.

Fed officials are coming around to the idea that inflation is influenced by the thinking of families, investors and business owners. Price movements, up or down, can become a self-fulfilling prophesy, according to economists.

Wasn't that what the so-called "Wealth effect" that the Greenspan, Bernanke and this Fed openly and shamelessly pushed, to influence those families and business people? Isn't that what rampant fiscal spending by the government is suppose to be about, persuasion?

The real problem here is groping. What a friend of ours calls The Federal Reserve of Groping.