RSS Feed MenuAmericans stockpiling gold as a hedge against runaway inflation may want to take a closer look at today’s Wall Street Journal. The paper reports that:
U.S. consumer prices barely rose in January from the previous month and core inflation fell for the first time since 1982, leaving scope for the Federal Reserve to keep supporting the economy with record-low interest rates.
Obviously, this is just one months’ data. But the possibility of renewed high inflation has been talked about for years now, and it still hasn’t really happened. That’s something to consider, along with the hoary maxim that the market can stay irrational longer than you can stay solvent.
sinz54 // Feb 19, 2010 at 10:32 am
The Federal Reserve just raised the discount rate for the first time since the current economic downturn began.
Why do you suppose they did that?
joemarier // Feb 19, 2010 at 10:47 am
Good point. They should raise it to 386%, like they do at the “discount window” on the corner that I go to when I’m short on rent.
Kidding, kidding!
joemarier // Feb 19, 2010 at 10:48 am
Regardless, this is one heck of a lag time for Obama/Bernanke’s allegedly hyperinflationary policies to kick in.
dendup // Feb 19, 2010 at 3:12 pm
The Fed raised the rate to .75%. Not exactly astonomic. Some have argued that excessively low rates contributed to the financial meltdown by helping to fuel the overheated housing market. So this rate increase could be seen as much as confidence in the recovery as a concern about inflation.
At any rate, Sinz has been forecasting stagflation as a result of O’s economic policies for the past year. Since nobody really understands what causes stagflation, it’s always possible, but so far, the high govt spending scenario has not proven to be true.
sinz54 // Feb 19, 2010 at 3:24 pm
dendup: Sinz has been forecasting stagflation as a result of O’s economic policies for the past year.
And I’m sticking with my prediction.
snxster // Feb 19, 2010 at 8:57 pm
Here’s a graph of the discount rate from ‘07 to ‘10:
http://unelected.org/2010/02/18/what-a-discount-rate-hike-means/
The Fed is seriously meddling with the economy.
dendup // Feb 21, 2010 at 6:49 pm
Sinz I admire your consistency, although, on the other hand I am reminded of this from Ambrose Bierce’s “Devil’s Dictionary”
PREDICAMENT, n The wage of consistency.
For my part, I try to avoid predicaments.