Economy at the height of boom
We had all better enjoy the summer months,
because the economy almost certainly will begin getting worse by the fall.
Already, signs of rising inflation are becoming so persistent, that even Fed
chairman Bernard Bernanke has been forced to worry about it in
public.
This is a serious development, because, as
perspicacious observers of the economy have known for a number of years, the
inflation figures compiled by the Federal government have long underestimated
real inflation, using all kinds of tricks, such as "seasonal adjustments," to
ignore those very items within the price index that are most likely to go up
drastically, like energy and food. The inflation books have been cooked for
several years now to make everyone think that things aren't so bad as one might
think. Meanwhile, the Fed has literally been pouring oceans of liquidity into
the economy.
Real
inflation (i.e., the expansion of the money supply) has been going on at an
extremely rapid pace ever since the 1987 Stock Market crash. The days of
Volkerian restraint are long gone. So now we have to pay the piper; and this
payment is going to be shockingly large. It's time to get reacquaint ourselves
with our old seventies friend,
stagflation.
Posted: Mon - June 12, 2006 at 10:28 PM