James Grant is on to something that was brought home to me at the coffee shop today. The price of a small increased to $1.74, up twenty cents. Gas and heating prices have also been increasing. Deflation sounds good for consumers about now...perhaps it would drive down home prices, too...Stay tuned.
"Now Mr. Bernanke stands to inherit what Mr. Greenspan and he, among others at the Fed, wrought. Certainly they have whipped deflation. But by pressing down interest rates to the floor, they have pushed housing prices to the sky. And they are the uneasy witnesses to an unscripted climb in the Consumer Price Index, which, in September, registered a 4.7 percent increase over last year.
Don't worry, many counsel. The seemingly alarming inflation data are the statistical tracks of a boom in energy prices caused by the Iraq war and the Gulf Coast hurricanes. It will pass.But what if it doesn't? What if a new cycle of rising prices has already begun - as I happen to believe it has?"
Wednesday, October 26, 2005
Rising Consumer Prices
Whatever the topic is, you know that when everybody is saying the same thing, nobody is thinking very much. It is refreshing to read in the New York Times a dissent by James Grant on both the overwhelming celebration of the Greenspan legacy and the new chairman of the FRB, Ben S. Bernanke: