No Inflation in Sight

In response to the recent multi-month, multi-year and all-time highs posted by the Dow, oil and gold respectively, your suitably-entertained editor last week remarked, “Good Golly…what isn’t going up?!”

Indeed, commodities across the board are on the march and prices from the grocery store to the gas pump are beginning to reflect that reality. One headline we saw this morning called for “$5 gas by Memorial Day.” According to the Lundberg Survey, the national average for a gallon of regular unleaded as of Monday was $3.76…and rising.

Up, up and away!

Meanwhile, gold was off to the races last week, at one point inching north of $1,475 per ounce. Silver, too, tickled $42 an ounce.

Let’s say that again. Silver. $42. Per ounce. That’s ONE ounce. At the turn of the millennium, you could have bought EIGHT ounces for that price…and had enough change for a couple of dollar meals at McDonalds or a pint at the pub.

You see what’s going on here, don’t you Fellow Reckoner? You’re paying attention? Right. Of course you are. You’ve been reading all about Bernanke’s crackpot monetary elixirs and conjuring tricks in these pages for long enough. You can probably recite the whole sordid tale in your sleep.

It’s a tale that involves debasing the dollar…and debauching our good language to boot! It turns “money printing” into “quantitative easing,” “too-stupid-to-succeed” into “too-big-to-fail,” and “change” into more of exactly the same expansionist, statist policy that free men and women are eternally called to rage against.

And, when the rhetoric has subsided, when the dust has settled and the phony-baloney prestidigitation is exposed for what it really is, you get what you always get when a central bank muscles in and carves out for itself a coercive monopoly in the counterfeiting business. You get – eventually, inevitably – inflation, that most creeping, insidious of taxes.

But wait! The International Monetary Fund says not to worry, that, “in advanced countries, we do not see much pass-though to core inflation.”

So reads their latest, as reported by the papers this very morning.

Did you read that, truck driver in Chicago (where gas is now over $4.35 per gallon)? Did you see that, grocery-shopping mom in Middle America, (where retail meat prices have risen more than 7% in the last year)? You read that, right, person who eats cheese and/or drinks milk and who has seen dairy prices climb by 15% during last month alone, and milk futures, as traded on the Chicago Mercantile Exchange, rise more than 50% in the past year? Cheese, in case you’re wondering, is currently trading at prices not seen since 1984.

That’s right, cheese-eating, milk-drinking, burger-chomping, car-driving people of America. There’s nothing to see here. Move it right along. Kindly return to your sofa for the latest episode of American Idol. Your government has everything under control.

Joel Bowman
for The Daily Reckoning