Niall Ferguson: Inflation's Back
Economist/historian Niall Ferguson is proclaiming "The Great Inflation of the 2010s" in Newseek. Sample:
To ordinary Americans, however, it's not the online price of an iPad that matters; it's prices of food on the shelf and gasoline at the pump. These, after all, are the costs they encounter most frequently. And with average gas prices hitting $3.88 a gallon last week, filling up is now twice as painful as when President Obama took office.
Sensing a threat to his hopes of reelection, the president last week called on Congress to eliminate "unwarranted" tax breaks for oil companies and set up a Justice Department task force to investigate price gouging and fraud in the oil markets. Give me a break. The spike in gas prices is the result of Fed policy, which has increased the monetary base threefold in as many years, and a geopolitical crisis in the Middle East that the president and his advisers still haven't gotten a handle on.
And the reason the [Consumer Price Index] is losing credibility is that, as economist John Williams tirelessly points out, it's a bogus index. The way inflation is calculated by the Bureau of Labor Statistics has been "improved" 24 times since 1978. If the old methods were still used, the CPI would actually be 10 percent. Yes, folks, double-digit inflation is back. Pretty soon you'll be able to figure out the real inflation rate just by moving the decimal point in the core CPI one place to the right.
Relevant Reason reading: "Lessons From the Great Inflation," a January 2009 look at the forgotten 1970s rise and 1980s fall of inflation, by Robert J. Samuelson; and "Inflation Returns!"–an October 2009 forum on the prospects, fears, and even hopes for rising prices in post-crises America, starring Peter Schiff, Jeffrey Rogers Hummel, Scott Sumner, Randall Parker, James Grant, Steven Gjerstad, Vernon Smith & Donald Luskin.
