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 | WAMU logo Ever since my favorite local bank, Washington Mutual (I know it is not a local bank) was taken over by JP Morgan I have been wondering about how its new overlord would handle the name of the organization. I was thinking that it could keep the Washington Mutual name since it has for me been a good bank and therefore [...] From our international banker this morning: The U.S. economy may yet slip into recession, but inflation is an even bigger risk given the “exceptionally” stimulative stance of monetary policy, Richmond Federal Reserve President Jeffrey Lacker said on Tuesday. Lacker pointed out that when adjusted for inflation, the federal funds rate for overnight lending, currently at 2%, is at its lowest level in post-war [...]
The federal government claims that inflation is low and fairly stable at present. Do you believe that? If inflation rises, this is supposed to be an indication that the economy is running too “hot”. Money is too available relative to the products, services, and property that are available for sale, so prices are bid up by eager buyers. So the Federal Reserve System – the FED – raises a key interest rate that they control, which starts a chain of interest rate increases, that chokes the money supply somewhat by making credit more expensive and, therefore, less attractive. If credit is more expensive, businesses (and consumers) that depend on credit for expansion, or even for operation, (or for consumption) have to restrict purchases, and business in general starts to contract. This contraction alleviates the pressure on prices, and the inflation rate stabilizes again. This is the CW – conventional wisdom – on the subject. What is a low inflation rate? The FED seems to like 1 to 3% at the consumer level. And, guess what – the federal government has reported inflation rates that typically fall in or near that range (at least until last month). My take is very different. If you would like to discuss, please read on: Note: this post continues below the fold. Click this button ==> Continue reading Inflation – Suspicions Confirmed |      | ||||
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Several recent articles here have mentioned ‘inflation’, but have used U.S. government statistics. It’s much worse, folks, than the official version. Here’s my down-home take, plus that of an actual expert, from 8 months ago. It still applies.
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