Federal Reserve must confront creeping inflation

[truthpusher]

http://www.whittierdailynews.com/Stories/0,1413,207~12041~2772197,00.html

Federal Reserve must confront creeping inflation
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By Rachel Beck
Associated Press
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Saturday, March 19, 2005 - All that talk about the rebirth of the Goldilocks economy not too hot, not too cold, just right may not last long because there are signs the inflation bear is lurking right outside the door.

(snip)

Behind this shift is the prolonged rise in crude oil prices, which are closing in on the $55-a-barrel peak that they reached last October, as well as big gains in prices for other commodities such as gold, copper, coffee and cocoa. At the same time, the dollar has been slumping against most major currencies.

Those factors are boosting price pressures elsewhere. Just look at the surprising 0.8 percent jump in January's core producer price index, which excluded energy and food and was largely driven up by higher wholesale prices in tobacco, cars, alcohol, clothing and toys. The gain was four times what analysts had expected and was the biggest one-month jump in the core rate since 1998.

complete story: http://www.whittierdailynews.com/Stories/0,1413,207~12041~2772197,00.html

[MichiganVote]

1. Inflation is only addressed when it affects the wealthy

The wealthy are so far ahead of where the average tax payer or small business owner is, it will be a long time before they do a damn thing. Banks are happy, insurance companies and Wall Street wins either way.

[TahitiNut]

4. It's about their Unearned Income.

Capital gains, in particular. There's never been a taxation adjustment for 'gains' attibutable to inflation. Thus, inflation is the only amelioration for the preferential treatment given unearned income. In the larger picture, inflation isn't currently a problem of the magnitude of employment and equitable compensation. But those are "working class" problems and they don't count.

The following charts the Trailing Twelve Months (TTM) increase/decrease in the Consumer Price Index (Urban Consumers).

[MichiganVote]

2. Self delete

[scarletlib]

3. It's hardly creeping.

All you need to do is go to the grocery store or fill your car's gas tank with gas.

I wrote a check for over $150.00 at the grocery store last week. I told my husband we are going to have to start cutting back. I buy meat for my grandsons and son who have dinner with us 3-4 times a week. Prices were outrageous.

[mbperrin]

5. Thank you! It's galloping as hard as the mid-70s!

Our electric rate is up 20% this year. Gasoline was 1.07 during Spring Break last year - $2.09 this year. 2x4 studs last year - $1.59; now $2.98; 1/2"sheetrock last year $3.49, now $5.29; 7/16" OSB sheathing last year $7.99, now $16.99; average groceries for 2 people last year (Jan-March) $84 per week, this year same time period $150 per week, and we have quit on better cuts of meat.

Haven't seen numbers cooked like these in can't remember!

[scarletlib]

6. Absolutely true

Grocery prices have been steadily increasing over the last 2 years but in the last 2 months they seem to have just skyrocketed.

I keep trying to explain to younger people what it was like to go through the inflation of the 70's. I had just gotten married in 1970.

My husband had just gotten his degree in chemistry and mathematics. He couldn't find a job anywhere. He ended up managing a Walgreens until he lucked into a teaching job that paid slightly better than Walgreens. We would have to buy food like fish sticks and hot dogs and count them out for dinner. I could make a 10 count package of fish sticks last for a week. To this day he hates fish sticks.

Here it is in simple economics: In the late 60's LBJ and Congress created a number of new entitlement programs aka The Great Society. These programs were great for a lot of impoverished Americans. However, he was escalating the Vietnam War and spending ever increasing amounts of money to fight that war. HE DID NOT CUT TAXES! BUT INFLATION RESULTED BECAUSE THE GOVERNMENT WAS PRINTING MONEY TO COVER ALL OF ITS EXPENSES.

Fast Forward to today: Many of those original Great Society programs are still here aka Medicaid, Medicare, food stamps, Head Start. (that's a good thing). bushco is now fighting a war in Iraq and spending billions of dollars.

WHAT HAS bushco DONE! CUT TAXES! NO DECREASE IN FEDERAL SPENDING AND NOW SPENDING BILLIONS ON A WAR. HE IS BORROWING MONEY TO PAY FOR HIS WAR. WE MUST PAY THE INTEREST AND THAT IS IMMEDIATE. GUESS WHAT, HE IS PRINTING MONEY TO PAY FOR ALL OF THIS.

THIS MEANS INFLATION. THEY CAN DENY ALL THEY WANT BUT IT IS HAPPENING NOW.
HE AND HIS LITTLE CREW CANNOT DENY THE LAWS OF ECONOMICS.

[teryang]

7. Fish sticks and hot dogs!

Thanks for reminding me. I had almost forgotten how bad it was.

The inflation rate is much higher than published. The CPI figures have been cooked since shithead & co. came into office. Working people are just suffering.

His base are going to take a financial bath, relatively speaking. The bond market is going to crash. Interest rates are going to have to go up. The base of elites have known this for some time, hence the ever increasing drive to accumulate tens of millions, if not billions in assets before the collapse arrives in full force. The disparity in wealth in this country must get worse as growth is driven by debt and inequitable tax schemes.

Warren Buffet is an example, he currently has tens of billions of dollars for which he can't find a place in traditional investments. Therefore, he is speculating in currencies and the dollars decline. He has huge fortunes in cash just sitting around. What does this action by the Oracle of Omaha tell us?

The commodities markets are on fire. The price of gold is manipulated downward by investment bankers and central banks to disguise the truth. But copper, zinc, lead, molybdenum, iron ore, tin, natural gas, you name it are on a run that is predicted to last for some time.

[scarletlib]

8. Yep, I am very worried about it all.

We are now selling our house and plan to use money to pay off debt and scale down on our lifestyle/spending and believe me we are not big spenders.

I am thinking of stockpiling some types of staples just to have on hand to make sure my grandsons don't have to go without.

I have never, ever, thought this way before. But I am deeply worried.

Another little anecdote from our early years: One time we didn't have any money to buy food. We had to use our Master Card to buy bread and bologna to last until payday. Of course these days people use credit cards to buy anything. But in the early 70's this just wasnt done. We had it rough and we were both college educated. I couldn't find any job in the small town we lived in. He was lucky to have the teaching job.

[Samurai_Writer]

9. Wasn't much better in the late 70s-early 80s either

I remember my husband and I eating LOTs of beans and franks, those pot pies you could buy 10 for a $1, mac and cheese that were 6 for $1 (made with powdered milk or sometimes just water, real milk was too expensive). We were really young and I was just out of high school, working at a bowling alley. He was a non-certified welder. At least I got to eat at the grill at the bowling alley for free. Some days that was all I got.

Prices have been climbing steadily the past 2 years. My grocery bill for myself is about $70 a week. I do buy fresh fruits and veggies, but no meat anymore. Heck, my cats and dog's food have gone way up too!

[Doremus]

10. You were married in the 70s; I was married in the 80s

during Raygun's terms and our experiences are very similar.

Interest rates were at nose bleed levels. People who worked in the dead auto, building or housing industries (as DH and I did) had to do acrobatics to make it until the next paycheck.

We ate alot of cabbage and noodles while folks with cash in the bank could have lived off just their interest.

I'm certain we're heading there again. The prospect of that kind of easy money is just too tempting to the PTB.

[scarletlib]

12. I had to get a job during those times after the birth of both

of our 2 children just to help pay the bills. The only really good times we had financially were in the 90's when Clinton was in office.

Our family is a textbook case of what has gone wrong with the economy in this country. 2 college educated people, both have to work and all through the 70's and 80's just holding our own. There were no fancy cars, or 'vacation' homes. We had the bare minimums needed to give a decent but not luxurious life for our 2 children.

My dad, by contrast, was a high school dropout who was able to support a family of 4 kids, a wife, and a mother-in-law on his income alone.

[teryang]

11. Sorry to hear about your difficulties

My wife and I compensate for the deteriorating economic conditions by tolerating unfair demands at work, because we consider ourselves lucky to have any work. My brother was wiped out by 12 months of unemployment recently. (He is a professional with an advanced degree) I just got over a six month bout. My spouse and I both work non stop, almost every day. On the books I am a forty hour person, but this is a joke. I take my work home with me every day and can't use my so called leave time. We spend very little time together because our schedules are so demanding. I work twice as hard for half the pay at the same kind of work I did fifteen years ago. Our health is being affected, we are middle aged. Neither one of us has a pension or a reasonable prospect of retirement.

Well, got to go back to work. Best of luck to you and your family.

[scarletlib]

13. Oh dear! You have it much worse than I do right now

We are doing okay so far. I have a good job--not high paying but I hope secure for another year or two. My husband ended up in real estate and South Florida where we live is still hot for sales and buys. I just hope when that bubble bursts sales will still be good in this area.

You know we should start a forum/collection of all the hard luck stories about the current economy in this country. I think this forum (DU) is very representative of what is happening in the country at large.

[spinbaby]

15. It's galloping all right

Some prices take my breath away. What's interesting is that items that are relatively "optional" such as clothing and electronics seem to be actually declining in price whereas stuff you really need like home-heating oil and food are skyrocketing.

[scarletlib]

14. kicking interesting threads lost in Schiavo Brouhaha