Get ready everybody. Things are about to get a lot more expensive.
In yesterday’s FOMC statement, for the first time that I know of, the
Fed stated that prices aren’t rising fast enough. The actual words were
this, “Measures of underlying inflation are currently at levels somewhat
below those the committee judges most consistent, over the longer run,
with its mandate to promote maximum employment and price stability.”
They must be referring to the CPI but we all know that measure has
been artificially engineered for decades. That’s why you can’t look to
TIPS as an accurate gauge.
Maybe they haven’t checked the prices of commodities recently. Below
are the performances since June 1 (a little more than three months ago).
- Corn +42%
- Copper +12.6%
- Crude +2%
- Cotton +27%
- Coffee +38%
- Gold +6%
- Silver +14%
- Dollar -8%
So if you think this isn’t going to feed into your daily purchases at
the local grocery store, then I have some oceanfront property to sell
you in Arizona.
It’s almost unbelievable. But what’s worse? The committee stands
ready to provide additional accommodation if needed to support the
economic recovery. Translation: We’re going to buy more bonds. It’s no
wonder Treasuries rallied post FOMC. Traders are simply front running
the Fed.
As usual the true lone hawk Thomas Hoeing dissented. See
my recent comments on hawks and doves at the FOMC.
LINK