Saturday, May 23, 2009


Fed Official: "Don't Monetize the Debt"

So argues Dallas Fed president Richard Fisher in today's WSJ. Apparently the Chinese have been reading my blog (though from my traffic reports, presumably only 0.00001% of them), because the WSJ reports:

[Fisher] has just returned from a trip to China, where "senior officials of the Chinese government grill[ed] me about whether or not we are going to monetize the actions of our legislature." He adds, "I must have been asked about that a hundred times in China."

Although Fisher is pretty cool for a Fed official, this part cracked me up:
He surprises me by siding with the deflation hawks. "I don't think that's the risk right now." Why? One factor influencing his view is the Dallas Fed's "trim mean calculation," which looks at price changes of more than 180 items and excludes the extremes. Dallas researchers have found that "the price increases are less and less. Ex-energy, ex-food, ex-tobacco you've got some mild deflation here and no inflation in the [broader] headline index."

I love how Fed officials take out energy and food prices and then talk about what a great job they're doing in stabilizing "the price level."

that 0.0001% is probably me. and unfortunately, im not chinese. just an american that has been living in taiwan for the past 7 years.
Are the FED
a ) Unable to read their own statistics
b ) To busy to look at it
c ) Blatantly lying

CPI w/o Food and Energy hasn't gone below 0% one single month during this crisis, and YoY has been lying constantly between 1.8% and 3%!?

The only thing that has in fact "deflated" is energy.
Savecapitalism: Are you overweighting tobacco in your calculations? Fisher took that out too...
Actually, I'm just using the series for CPI "All items less Energy" and "All items less food and energy" from the FED. But they can't seriously mean that "oh, on average prices are not deflating, but if we remove this, this and this...."

I mean, if you squint hard enough, I'm sure sooner or later you'll see jesus on a piece of toast, but that hardly makes it a revelation.
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