Bob Brinker: Market Savant & Radio Host Message Board

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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host

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To: yaetmo who wrote (23908)	8/20/2006 2:24:52 PM
From: Kirk ©	Read Replies (2) of 42834

Bob Starting to Spin on Inflation! Bob had a wonderful "duh moment" yesterday. A caller was asking about inflation and the price of oil and what component of CPI, the measure of inflation went down to offset higher oil prices. We might quibble and say higher priced oil doesn’t cause inflation because it is inflation! Bob said food and apparel and gave quite a good answer.... then when pushed he said we didn't get inflation because the Fed decided to not monetize the higher oil prices. I was on my bike and said "well, duh!" The Fed has said since it started to raise rates that it was seeing signs of inflation (mostly higher commodity and real estate prices caused the most worry) so they would continue to raise rates until these backed off. The big jump in oil was in the last two years...the same two years we've had an unprecidented 17 straight increases in the Fed Funds rate! duh Bob... if the Fed had NOT raised rates, then we would have had higher inflation due to higher oil prices. Thus they had to take a counter measure to offset the inflationary effect of higher oil prices. I can tell Bob probably understands this, but it will take several weeks of spinning to rephrase "what we've said all along on Moneytalk" so he no longer sounds so foolish on this whole issue.

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