"Despite a very clear set of data that show a sharp acceleration in inflationary pressures, there is a rampant denial that these pressures are worth worrying about.
Consumer prices, producer prices, and import prices are all signaling that American workers are having their purchasing power eroded. During the 12 months ending in January, consumer prices are up 4.3% - and 6.8% at an annual rate in the past three months, the fastest three-month increase since 1990 (excluding the immediate aftermath of Hurricanes Katrina and Rita).
The Federal Reserve Bank of Cleveland tracks something called "trimmed mean" inflation. This measure excludes the 8% of items that are rising the fastest and the 8% that are falling the fastest (or rising the slowest) to focus on the underlying inflation trend. Trimmed mean inflation is 3% for the past year, the highest since 1993.
On Tuesday, January producer prices are expected by the consensus to rise 0.3% (we forecast 0.5%). Assuming the consensus is right, that would bring the total increase versus last January to 7.7%, the largest increase in any twelve months since 1981. Import prices are up 13.7% versus last year, the largest increase on record going back to the 1980s."
Ron Paul, the only economist running for president, is also the only presidential candidate to address the 'inflation tax' as part of his platform. In part, his platform statement says,
"Day by day, every dollar you have is being devalued. You pay an inflation tax without even realizing it because you are forced by a falling dollar to pay more for goods and services.
The disastrous fiscal policies of our own government, marked by shameless deficit spending and Federal Reserve currency devaluation, are some of the greatest threats facing our nation today. It is this one-two punch — Congress spending more than it can tax or borrow, and the Treasury printing money to make up the difference — that threatens to impoverish us by further destroying the value of our dollars." - RonPaul2008.com
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