The Fed Thinks you’re Stupid

Consumer prices are going up… but there’s no inflation, says the Fed. Not only do they want you to believe that, they want you to believe they’ll never monetize debt – another lie Wealth Daily has pointed out. Today, even as consumer prices “rose moderately,” there was little sign of inflation because auto, clothing and hotel prices fell. Well woop-dee-friggin-doo… energy and food weren’t accounted for in the core number. And, according to “experts,” “ Fears about a potential outbreak of inflation from the Fed’s recent moves are massively overblown and are completely out of sync with the reality of extremely competitive markets for … products and services,” said Brian Bethune, an economist at IHS Global Insight. Are they kidding? Or are they just this naďve? Even a Wal-Mart survey says inflation is here . As the Wall Street Journal points out, “Prices of staples including milk, beef, coffee, cocoa and sugar have risen sharply in recent months. And food makers and retailers including McDonald’s Corp., Kellogg Co. and Kroger Co. have begun to signal that they’ll try to make consumers shoulder more of the higher costs for ingredients.” Food prices are actually rising faster than inflation numbers. CPI, which excludes food and energy, was up 0.8% to its lowest 12-month increase since March 1961. Unfortunately, the food index was up 1.4%. And the U.S. Agricultural Department is predicted overall food inflation of about 2% to 3%, says The Reformed Broker. Let’s take a look back at what I said recently in Wealth Daily. In the months since Bernanke told us QE1 would not jeopardize the stability of prices, the price of oats is up 40%. Orange juice is up 45%… rice is up 50%… coffee is up 60%… copper is up 70%… and silver is up 100%. Passing the price to consumers The prices are, and will continue to be, passed on to consumers. Kraft just told investors about half of the company’s input costs have spiked 20% to 30% year over year, and the company had to raise prices on consumers. Just last week, Kraft Foods (KFT) posted a 26% rise in Q3 revenue; however, due to rising material costs, profits fell close to nine percent. Plus, Kraft is hiking prices some 40% shortly… Kroger announced it would have to raise prices. McDonald’s, Safeway, and Domino’s are all doing the same. General Mills is raising prices by “low digits” on 25% of its cereals on November 15. For crying out loud, bacon is up 16% in September 2010 from September 2009. Even UPS just announced it was raising shipping rates an average of 4.9% in January. Is it possible all these companies lost Ben’s memo that inflation was under control? All Bernanke has managed to do is create an environment where companies are forced to raise prices… And it’ll only get worse, as the dollar drifts lower. Bill Gross, for example, thinks the dollar will fall another 20% if the Fed continues this monetary easing policy.   Companies are paying more for the things that produce the things you buy. When the prices you pay go up, that’s inflation. That’s what’s happening right now, even as you read this. Cat’s …

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The Fed Thinks you’re Stupid

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