I’ve been saying for a couple of years now that the talk of deflation was going to go the way of the dodo. This year it really seems to have hit home. The only people I see talking about inflation are the bankers at the Fed, who are getting chastized by the international bankers for just using it as a ruse to print money- which is exaclty true.
The Fed points to the Consumer Price Inflation Index as proof that inflation is not happening, but as I pointed out in my book, that index has been tortured to the point where it will confess to anything. I really enjoyed this video entitled Quantitive Easing Explained, for many reasons. Primarily it’s both funny and accurate, but I also love the way it goes over so many items that are more expensive than they were a year ago.
Clearly, comumer prices are going up. The latest story to discuss the rise in consumer prices is the Christmas Index or the price of all the items mentioned in the 12 Days of Christmas. According to the most recent calculation, the Christmas Index is up 10.8% over last year. A 10.8% rise in a basket of goods in a single year is pretty astounding, and I’d venture to guess that it may have something to do with all the money the Fed is printing- call me crazy.
In the 1970s, inflation close to 11% was an unstabalizing force in society and the economy as people began raising prices and demanding more interest in anticipation of future inflation. You know what they say about history and those doomed to repeat it. What can I say, predicting the future is really pretty easy if you know where to look.