Inflation Is Here

For months now, the Federal Reserve has been worried about inflation being too low. So low, that the Fed claims it is unhealthy to the U.S. economy. When it announced its second wave of money printing (QE2) in early November 2010, the Fed said, “Longer-term inflation expectations have remained stable, but measures of underlying inflation have trended lower in recent quarters. . . . To promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to expand its holdings of securities.” (Click here to read the Complete Fed News release from November 2010.) That means the Fed started printing $75 billion a month, out of thin air, to finance more than half of the U.S. budget. QE2 is scheduled to end in June, but many predict it will be immediately followed by some sort of QE3.

The mainstream media is spinning the latest consumer price numbers as good news, but inflation 2011 is here. The Associated Press called inflation “tepid.” The story went onto say, “The Labor Department said Friday that consumer prices rose 0.5 percent last month, the largest increase since June 2009. Roughly 80 percent of the increase was due to higher gas prices. . . . Without food and energy costs, consumer prices only increased by 0.1 percent for the second straight month. This “core” inflation rate has gained 0.8 percent in the past year, evidence that prices are not rising too quickly.” (Click here to read the entire AP story.) It would be nice to live in a world where you don’t need food or energy, but that simply is not the case. (more)