Interest Rates lowered again...

In an effort to stimulate investment, the Fed has again lowered rates.   I'm still wondering why though...

Liquidity has been holding steady thus-far, and inflation seems to be growing.  Growth is measly, but supposedly holding positive - at least according to our pointy-haired overlords.

Here's what I see happening though... this newfound investment credit isn't going to build new capitol.  It's not going towards real-estate, manufacturing, and I'd venture to guess that little of it is going overseas.

No, it's going into commodity markets.  Oil, grain, pork bellies, milk.  Yeah, exactly.  In other words - our supposed bailout is only going to exacerbate inflation!  Investors don't care, and honestly what choice do they have?  If I had 50 million sitting in the bank, you'd bet I'd be playing commodities and currencies.

It's time for [insert person in charge] to do the handout I'm afraid.  Yeah, it'll look weasel-y and "corporate friendly" - but honestly it does work.  Time to give away the capitol improvement tax credit.  Time to spur labs making cars, computers, and everything in between.  Do it on the cheap with big credits and small funding - and you'll likely drive the US into another boom 5-10 years from now.

Until then... every-time you buy a 2 dollar loaf a bread and a 6 dollar gallon of Milk, you can thank Mr. Investor and his friend Uncle Fed.   Break out the Caviar!

Ringing the bell...

Or is that a bell tolling?

According to the "prophecy," when you keep expanding the money supply, lower the interest rates, and generally prop up an economic recession - you end up with massive inflation.*

My grandmother used to say the surest way to measure inflation was by watching the price of salt.

Salt is relatively free of subsidies, price wars, technical advances and the like - you basically dig it up, clean it, and sell it.  You don't see a sale on salt - it's just what it is.  (Excluding the British)

So, I'm confugled now... I paid 54¢ for salt, up from to 34¢ a year ago - showing an increase of 54% in price.  Sure, a lot of that is oil and transport increases, but surely there's some inflation there?  Surely it's more than the 4.1% (including oil & transport!) which the CPI showed for 2007.  

So I go to look at the RAW CPI data.  When I was a kid, you got to see the price of milk the CPI based their adjustments.  But since 1998, the CPI is index based.  Meaningless numbers have replaced reality, with this "index" based on an average price increase, from an average cost collected in the years 1982-1984.

Confused yet?  Ah, but wait!  Now we also have "seasonally adjusted" this index so that it gets flatter - so an obvious trend can be "seasonally" adjusted for, oh say, any reason at all!

My advice - stick to the salt.

Oh, and save, save, save.

* inflation: a general increase in prices and fall in the purchasing value of money