I was confused by last Friday’s March inflation report from the government, and the stock market’s response to that report.
I know. I know. Government numbers are warped and repackaged these days to golly up us proles and convince us that things are better than we know they really are. And the stock market is pretty much just a measure of how much money big banks and hedge funds want to make on any given day with their computer-generated trading. Even so, I found this most recent inflation report and the stock market’s response to it rather odd.
The basic numbers in this report are straight-forward. Overall inflation in March rose .5 percent. During the past 12 months this number is a 2.7 percent annual rate, which is above the Fed’s own target rate of 2 to 2.5 percent. And if you just look at the last four months, overall inflation’s annual rate is running better than 5 percent.
These numbers are pretty scary. What makes them scarier is the fact that if inflation were computed the way it was computed before 1980 when the government started fudging the numbers egregiously, official inflation would now be running at nearly a 10 percent annual rate.
Ah, but now we come to the “core rate” of inflation that excludes food and energy. Let’s forget for the moment that pretending that this “core” is nothing but deliberate deceit aimed at disguising the obvious, and let’s focus instead on how this core itself managed to rise just .1 percent in March — a number that we are told gives the Fed the idea that inflation is still well under control, and gave the stock market yet another justification to rise (the Dow was up 56 points on Friday when these numbers came out).
Forgetting food prices that were up 1.1 percent in March, and gasoline prices up more than 14 percent in the last three months, we also find in the official government report that medical expenses were also up in March, housing was up, public transportation costs were up as were the costs of cars and trucks. Natural gas prices did fall, but household energy expenses that include natural gas rose.
So what kept the so-called core rate at just .1 percent? Furniture and clothing prices dropped on a seasonally adjusted basis.
Let me make a suggestion here to Fed Chairman Bernanke. Ben (You don’t mind of I call you Ben, do you? You can call me Mike). Ben, who do you think you’re kidding? We’re getting squeezed bad out here in 99 different ways from rising prices. Your core rate twaddle isn’t merely irrelevant and flagrantly deceptive. It’s offensive.
As for my message to the stock market and its endless interpretation of virtually any facts as positive reasons to rise (though that S&P warning on our national debt seemed to cause a temporary dip today). Get it while you, ye big banks and hedge funds. Because when this game ends, which won’t be long now, the fallout is gonna really, really hurt.
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