Dearborn truck plant. Producer prices show the amount producers receive
Producer prices in the US rose to their highest annual rate since October 1981 in January.
Prices rose 7.4% from January 2007, while they were up 1.0% from December 2007, the Labor Department said.
Monthly core producer prices, which exclude food and energy costs, rose by a greater-than-expected 0.4%.
Producer prices, sometime known as factory gate inflation, show the amount domestic producers receive for their products.
Inflationary pressures tend to show up earlier in producer prices than in consumer or retail prices figures.
Interest rates
Growing inflation is a problem for the Federal Reserve's interest rate setters, who are aggressively cutting the cost of borrowing to prevent a recession.
If inflation gets too high, they will be unable to cut rates further.
"It is a bit troubling, because this release indicates clear pipeline inflation pressures," said Matthew Moore from Banc of America Securities in New York.
"That could limit the Fed easing to counteract the credit tightening."
So you agressively cut rates and... get inflation. Which stops the ability to cut down rates. Wow. Would never expect that to happen, would you?
Also, when you are talking about an economic fuck-up massive enough to use the words "record since 1981", use careful codewords like "a bit troubling".
Lì ci sono chiese, macerie, moschee e questure, lì frontiere, prezzi inaccessibile e freddure
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Well the stock markets are up nearly 1% today so we clearly have nothing to worry about. Everything is fine.
Well, other than the increasing rate of foreclosures on homes along with a major drop in consumer confidence, the worsening mess in the finance industry, mounting job losses, and record levels of consumer debt. Gee, maybe things aren't going so well afterall.
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I'm not sure why people choose 'To Love is to Bury' as their wedding song...It's about a murder-suicide
- Margo Timmins
When it becomes serious, you have to lie
- Jean-Claude Juncker
Hell, I wouldn't invoke Zombie Reagan because under his first term, Paul Volcker's Federal Reserve cranked up interest rates in order to rein in inflation despite the recession it caused.
The current Fed Reserve Chairman, unlike Volcker, can't see beyond the short term.
"You say that it is your custom to burn widows. Very well. We also have a custom: when men burn a woman alive, we tie a rope around their necks and we hang them. Build your funeral pyre; beside it, my carpenters will build a gallows. You may follow your custom. And then we will follow ours."- General Sir Charles Napier
Glocksman wrote:The current Fed Reserve Chairman, unlike Volcker, can't see beyond the short term.
Who's he? Is he a Greenspan clone or someone different from that breed?
Lì ci sono chiese, macerie, moschee e questure, lì frontiere, prezzi inaccessibile e freddure
Lì paludi, minacce, cecchini coi fucili, documenti, file notturne e clandestini
Qui incontri, lotte, passi sincronizzati, colori, capannelli non autorizzati,
Uccelli migratori, reti, informazioni, piazze di Tutti i like pazze di passioni...
...La tranquillità è importante ma la libertà è tutto!
The current Chairman is Ben Bernanke
It's Wikipedia, so keep that in mind when reading.
I'm no economist, but I did live through the late 1970's and remember the combination of high inflation (driven in part by high energy prices) and weak to nonexistent economic growth.
In fact, they came up with a new term to describe it; stagflation.
It took a few years of Volcker's Federal Reserve cranking up rates to wring out the inflation, thus causing a recession that only ended in 1983.
But at the end of it, the economy was stronger.
"You say that it is your custom to burn widows. Very well. We also have a custom: when men burn a woman alive, we tie a rope around their necks and we hang them. Build your funeral pyre; beside it, my carpenters will build a gallows. You may follow your custom. And then we will follow ours."- General Sir Charles Napier
