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Wednesday, January 16, 2013

Core Inflation?

The Federal Reserve uses the core inflation index, which excludes petroleum and food prices, as its standard for maintaining monetary stability.  Theoretically oil and food prices distort measures of inflation, because they are subject to temporary destabilizing factors. 

That’s analogous to excluding all strikeouts when calculating a baseball batter’s hitting average.

In the real world, outside the fairy land of liberal-progressive Keynesian monetary manipulation, the “temporary” upthrust of oil and food prices in U. S. dollars has been unremitting for the past twelve years, primarily because of the Fed’s easy-money, low-interest-rate policies.  That is massive inflation.

Check out the numbers on the Mises Daily website.

Posted by Thomas E. Brewton on 01/16 at 06:20 PM
Economics • (3) Comments
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