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To: ChinuSFO who wrote (104604)	11/22/2011 1:04:06 AM
From: John Vosilla	Respond to of 149317

What inflationary pressure? Any data to back that up? Good question and it is a mixed bag. There are multiple reasons Bernanke has been able to keep long term rates so low for so long that many miss... Actually if they can get oil prices back down as we wind down these wars and increase mpg dramatically on new cars we might be staying in a disinflationary band of 2-5% overall for a very long time even after we come out of this mess. No one knows for sure even Bernanke but I am thinking more and more that is the end game rather than hyperinflation like we have had in food, healthcare and education the past decade...

To: ChinuSFO who wrote (104604)	11/22/2011 9:08:18 AM
From: RetiredNow	Read Replies (1) \| Respond to of 149317

Chinu, I love data. Thank you for asking. I usually try to limit my forays into data on these threads, because most people don't have the stomach for it. Anyway, here goes. Currently, the US inflation rate over the 12 months ending October 2011, is 3.5%: usinflationcalculator.com Now keep in mind that the Fed targets inflation to be no higher than 2%. So already the real inflation rate is 75% higher than the Fed's own stated target. Some highlights that the Fed doesn't like you to know about: * gasoline is 23.5% higher than last year * food is 4.7% higher than last year * medical care is 3.1% higher than last year If you calculate growth from where we are today in CPI-U (Oct'11 = 226.421) over where we were at last Dec (Dec'10 = 218.056), prices are 3.8% higher. If you extrapolate that to the end of this year, then that could mean we see prices rise in 2011 over 2010 by 4.6%. See link below: usinflationcalculator.com Now keep in mind that wages are stagnant and the economy is not growing fast enough to keep up with population growth, which is why the unemployment rate has barely budged from the 9% rate. A 3.8% inflation rate (Oct'11 / Dec'10) growing to a potential 4.6% inflation rate (Dec'11 / Dec'10) by the end of the year is damned harsh medicine already. Imagine if we go into recession right now and the Fed begins QE next year in response to a stock market crash, as I have predicted they will? Inflation will explode into a repeat of the early 1980s, just as a new round of layoffs and wage cuts begin. We're talking the mother of all stagflation scenarios. We're not that far from that outcome. Truth is though, I don't want to overplay this and become too alarmist. If the Fed doesn't do QE again, as I have predicted, then inflation will come right back down as we head into the new recession right about now. So inflation doesn't have to be a problem, unless the Fed makes it so through their own recklessness. Remember, as Milton Friedman once famously said, "inflation is always and everywhere a monetary phenomenon," meaning it is all up to the Fed. They can sink this ship with inflation or they can let the free markets sort out the bad actors.