SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : Mish's Global Economic Trend Analysis
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
From: stockfiend3/10/2008 1:34:17 AM
  Read Replies (1) of 116555
 
Inflation Alert
By GERALD P. O'DRISCOLL JR.
March 10, 2008; Page A14

online.wsj.com

Excerpts:

"...But the early '70s, not the decade's end, offer the more ominous parallels to today's situation."

With "headline" consumer price inflation (CPI) at 4.3% for the last 12 months, we have now reached the inflation rate that spurred Richard Nixon to impose wage and price controls on Aug. 15, 1971.

"The use of the core rate has lulled both the administration and the Fed into complacency, disconnecting them from the experience of ordinary consumers. Until recently, inflation doves pointed to the flat yield curve (long-term interest rates close to short-term ones) to buttress their case that inflation and inflationary expectations are low. But the bond market was slow to pick up on the new era of inflation in the 1970s. Not until 1974-75 did the long-bond yield and the yield curve finally flash an inflation warning signal. From July 1974 to May 1975, the Fed funds/long bond yield spread went from negative 466 basis points to a positive 300 basis points."

Economists Manuel H. Johnson and Robert E. Keleher found that only in late 1977 and early 1978 were "all the key market price indicators [commodity prices, exchange rates and bond yields]" signaling "a significant deterioration of the value of money."

The bond market was late to the game in the 1970s and may once again be a lagging indicator. The retirement savings of millions are meanwhile gradually being confiscated.

Mr. O'Driscoll, a senior fellow at the Cato Institute, was formerly vice president of the Federal Reserve Bank of Dallas.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News