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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Jim McMannis who wrote (19911)	10/13/2004 3:37:35 PM
From: Skywatcher	Read Replies (2) \| Respond to of 110194

Here's the inflation.... it IS HERE.... Gasoline Pump Price Highest Ever for October Reuters Tuesday 12 October 2004 WASHINGTON - The national price for gasoline increased 5.5 cents over the last week to $1.993 a gallon, the highest pump price ever in October, while diesel fuel set a record for the third straight week, the U.S. government said on Tuesday. The pump price for regular unleaded gasoline is up 43 cents from a year ago, according to the U.S. Energy Information Administration's nationwide survey of service stations. The latest weekly gasoline price is just 7 cents away from the record pump price of $2.06 a gallon reached in late May. The Energy Department's analytical arm also said the price for diesel fuel increased 3.9 cents to a record $2.092 a gallon, up 61 cents from a year earlier. Higher crude oil prices that reflect supply concerns are pushing up pump costs, as oil accounts for about half the cost of making gasoline and diesel. About 471,000 barrels of U.S. oil production a day in the Gulf of Mexico is still off line because of damage to platforms and pipelines caused by Hurricane Ivan. The price for U.S. crude oil hit a record $54.45 a barrel in overnight trading at the New York Mercantile Exchange. The EIA's weekly survey showed the retail price for cleaner-burning reformulated gasoline, sold in polluted metropolitan areas, increased 7.4 cents to $2.086 a gallon. The West Coast had the most expensive regular unleaded gasoline, with the price up 9.5 cents to $2.241 a gallon. San Francisco again topped the agency's city survey of gasoline costs, with the price skyrocketing 14.7 cents to $2.371 a gallon. The U.S. Gulf Coast had the cheapest fuel, with the price up 4.7 cents to $1.885 per gallon. Houston had the best deal at the pump at $1.833 a gallon, up 3.4 cents. The weekly report also showed gasoline prices were up 3.2 cents to $2.053 in Seattle, up 6.2 cents to $2.034 in Chicago, up 3.6 cents to $2.024 in Miami, up 15 cents to $2.018 in Cleveland and up 4.6 cents to $1.991 in New York City. Separately, truckers on the West Coast paid the most for diesel fuel at $2.276 a gallon, up 3.8 cents from the prior week. The Gulf Coast states had the cheapest diesel at $2.033 a gallon, up 3.3 cents. -------

To: Jim McMannis who wrote (19911)	10/13/2004 4:12:58 PM
From: Elroy Jetson	Respond to of 110194

Under-reporting inflation makes a sick economy look good on paper. Inflation does not indicate a strong economy, usually quite the contrary. It's also true that you can have a very strong economy with no inflation, or even deflation. When you're locked inside the Monetarist fun-house, like our economy is, it can become confusing. According to a Monetarist, rising commodity prices means the economy is too strong and needs higher interest rates to cool off. In our current global economy rising commodity prices indicate the the Chinese economy is very strong and is increasing their use of commodities dramatically beyond their historical rate of use. It also indicates the high level of speculation because interest rates are too low and money is too available. Here in America, the economy is very weak due to excessive debt. The Fed's only solution is to increase the debt load of consumers, business and government, even more to keep demand up. They call this "increasing the money supply." Ideally, the Fed wants to keep internal prices in the US constant while the excess money supply steadily decreases the value of the US Dollar. This gives every business a profit-cut and every worker a pay-cut allowing us to export our way out if debt. But certain imported items bring inflation home in spite of their best efforts, oil is the best example. If the government did not under-report inflation, three problems would occur: First the reported Growth Rate of the economy would shrink by the amount by which they were under-reporting inflation, down to what the growth rate really is. The amount of under-reported inflation shows up in the national accounts as "productivity" so the productivity miracle of the past ten years would evaporate, lowering investor confidence; Second, if inflation is really 4% or 5% the current Fed Rate of 1.75% is negative, inappropriate and even scary. If inflation was reported correctly, the Fed could not pump debt money into the economy as fast as they can now and the real weakness would become obvious; If the Fed believes they need to keep pushing money into circulation they need to hide under a reported inflation rate lower than the real one. Third, if the CPI reported actual inflation, contracts indexed to the CPI will push inflation through the economy more thoroughly (materials suppliers, Social Security, labor contracts. Under-reporting inflation is a con job which makes a staggering economy look just fine - unless you understand a little about economics, but that's a relatively small group.