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

To: ohyeah who wrote (51214)	1/24/2006 8:45:13 PM
From: mishedlo	Read Replies (2) \| Respond to of 110194

Energy is understated in the CPI. The problem is prices go up or down for reasons other than inflation. Targeting prices is a fool's game. It can not be done and I believe the FED has proven it cant be done. The FED should have had its foot on the brakes in the mid-late 1990's but did not because all they saw was prices not moving much and oil and gold and computers falling. It was a horrid mistake that led to the dotcom crash. The FED should have been hiking like mad because of the expansion of credit. Instead it was worried about a stupid Y2K scare. So I agree with you, energy and housing are understated in the CPI. Computers are overstated in the CPI. The problem is that information is more or less useless as to what to do about it. If oil went to $200 tomorrow on a blowup in Saudi Arabia, would the right response be to hike interest rates to the moon? We are where we are because people focused on the CPI not on reckless expansion of money and credit! Mish