If you think that rising demand causes inflation, the sensible thing to do is reduce demand. You do that by raising interest rates. The higher cost of money causes people to cut back borrowing and be more prudent. Aggregate demand in the economy falls, and, presumably, so do prices. But that is all catastrophically backwards. It is a text book cause of putting the cart before the horse…
July 17th, 2008 | Dan Denning | 7 comments | ContinuedAll Posts Tagged With: "consumer prices"
High oil Prices are Now Oozing into the Entire Economy
When the Fed began cutting rates last September, the price of oil shot up. High oil prices are now oozing into the entire economy…greasing up prices for everything from cucumbers to diapers. And the trends that held consumer prices down for so long are shoving them in the other direction.
June 3rd, 2008 | Bill Bonner | 3 comments | Continued
The Fed Continues to Bamboozle Consumers Into Thinking They Are Richer Than They Really Are
There’s also a hidden flimflam…an even more important one. Since ‘95, reports Martin Hutchinson, the U.S. money supply, as measured by ‘money of zero maturity,’ has gone up at about 8.8% per year. The average fellow, seeing that he has 8.8% more cash…
May 8th, 2008 | Bill Bonner | 2 comments | Continued