18 MAR 2011, Friday

• No inflation my ass!  
• Don't know what kind of crack the Fed is smoking.  Perhaps they should "Just say no!"
• Check out the energy and education components.  Mini-rant...largest component of education expense...Hmmm, teacher salaries perhaps?  And the results?  I'll just let you connect the dots there.
• You can click on this to open a new window that allows you to click links at the top to look at the entire series.
• And, for perspective regarding ridiculously escalating education costs...you thought housing was a bubble???  If so, what are education cost increases?  Put quite simply, a nightmare!!!  
• UPDATE with some interesting charts below...
• The Federal Reserve's QE2 was announced in AUG 2010 and actual purchases of US Treasuries began in NOV 2010. 
• The CPI, below, indicates an over 5% annualized rate since NOV.

• That impacts consumer purchasing power.  For example, below is a chart of real wages (wage changes less inflation rate).  Notice how real wage gains are negative toward the end of 2010.  Dunno about you, but that doesn't seem good to me.

• Next, below, is the Producer Price Index (PPI).  This is the price rate of change that producers are experiencing in order to get the materials needed to make their goods which they, in turn, sell to you.  
• Last year, their prices went up 5.8%.  Last month their prices went up over a 20% annualized rate.  That is inflation in the pipeline on its way to consumers.  Also, notice the trend since AUG (QE2 announcement).
• What if producers can't push all the increase through to a retrenching consumer?  Profit margins are vulnerable which could weigh on their stock prices.

• In summation...not pretty!  Not at all.
• Welcome back to the 1970's???
• I sure hope disco doesn't come back!
• There's still a chance that this is a temporary spike as QE programs are showing they're really not improving the economy much.  What if the economy rolls over again even with QE?  That's deflation.
• Well, 2011 certainly is shaping up to be a wild year with political, natural and market events!