The Written Peace:
Open Forum of April 20, 2005
Now, since this is an Open Forum post, the usual dignified, measured, and scholarly language that veritably oozes from the Dark Wraith can be suspended briefly to comment on the producer price index that was released on Tuesday. Recall that the PPI measures inflation at the wholesale level. For March, the overall producer price index rose by seven-tenths of a percent, which translates into an annualized inflation of about 8.7 percent, a real attention getter for inflation hawks. CNN.com, ever the bluebird of happiness and optimism, had this take on the numbers: "The so-called core PPI, which excludes often volatile food and energy prices, gained 0.1 percent... The core measure is considered more important for monetary policy and added to speculation the Federal Reserve would not have to be more aggressive in raising interest rates."
Yes, Fed Chairman Alan Greenspan has put himself on record as being interested in what business and households face in the absence of those trivial woes about skyrocketing food and energy costs. But that has an interesting side consequence, especially as the Fed is tightening the money supply. You see, fellow students of economics, if energy and food costs are rising rapidly, and the Fed is not cranking out money to make people feel like they have cash in their pockets, what do you suppose is going to happen to demand for everything other than food and energy?
That's right, demand will weaken because of the so-called "income effect"! And when demand weakens, so do prices on all of those things other than food and energy.
Well, spank me, Pope Benedict of the Eggs! Mr. Greenspan and CNN are telling us that, if we ignore the patient's heart attack for a moment, we'll notice that the good fellow is really quite dead.
Enough with the hurtful and unproductive sarcasm.
The stock markets on Tuesday had a nice up day, the kind presciently described here on The Dark Wraith Forums last Saturday as a "rally in the bear market." But then again, that last sentence really does have a hint of self-promotion, something wholly unbecoming of a mainstream, reputable economist. Expect more of the same, then, should the economy continue to pump out dire numbers.
Speak your piece on any matter that comes to your mind or heart. This is the place: all blogging, all the time. And do make sure you tip the waiter. The Dark Wraith pays wretchedly low wages.