May 19, 2007

More US Inflation than Government Data Lets On?

Barry Ritholtz:

This week's Up and Down Wall Street looks at a recent analysis out of QB Partners. They are a hedge fund run by Lee Quaintance and Paul Brodsky.

QB put together an analysis of the US dollar, and why its ongoing weakness is both significant and ongoing. In their analysis they see the buck ultimately endingits run as the world's reserve currency.

The heart of the analysis is the quandry left for the current Fed chairman Ben Bernake by new PIMCO flack and former Fed Chair Alan Greenspan.

Poor Ben is confronted with a long term Hobson's choice: tighten the monetary and credit screws to bolster the dollar, go the other way -- loosen credit and lower rates even further to prop up asset prices. Why is this no choice at all? Because History has taught us the Central Bank will continue to "inflate the money supply and promote more credit, thereby sustaining asset prices at the expense of the purchasing power of the dollar."

There's something to this. Grocery shopping recently I noticed that Stonyfield's yogurts are now .99 each, up from .79 not so long ago. I also noticed that Listerine has shrunk their $6.50ish container, thereby increasing the price. I wonder how solid the Government data is?

Posted by James Zellmer at May 19, 2007 3:55 PM | Subscribe to this site via RSS:
Posted to Politics