The inflation genie may be out of the bottle for a while. The headlines are being made by food and energy prices spiking higher. The Fed and many economists ignore food and energy when looking to underlying inflationary trends, relying instead on core inflation to signal the direction of prices. To date, core [...]

Oil hit $126 a barrel today on production fears. Refiners and firms that need oil to make money seem to be hoarding it as the price rises inexorably higher. According to Bloomberg, “U.S. crude supplies rose 5.65 million barrels to 325.6 million barrels last week, amid increased imports.” In the end, this may [...]

With oil prices edging up near $120 a barrel, isn’t it time for a Windfall Profits tax on oil companies in order to alleviate the burden of the high cost of oil? The short answer is no. Let me explain why.

When you hear about inflation on TV, don’t you often wonder why the official number seems lower than inflation feels to you when you go shopping? It’s an open secret in Washington, but the Consumer Price Index (CPI), the common measure of inflation, understates inflation. How this occurred is not entirely clear, although many [...]

As the Fed Funds rate gets close to zero, pundits have been worrying about a pending liquidity trap. While I think these worries are well placed because the Fed is running out of bullets, I am more concerned about inflation right now.
We are in the midst of a credit crisis. Banks are having [...]

Steve Hanke, a libertarian economist who writes for Forbes, argues that the Fed is panicked about the economy in a piece that came out today. He believes they have lowered the Fed Funds interest rate to where inflation is now a problem. His suggestion: buy gold! (read article here)
He is right. The [...]

Recently, on Mar. 18th, the Federal Reserve lowered the Fed Funds rate to 2.25%. In the accompanying statement, the Fed said the following:
“Recent information indicates that the outlook for economic activity has weakened further. Growth in consumer spending has slowed and labor markets have softened. Financial markets remain under considerable stress, and the [...]

The U.S. economy is in recession and the misery is deepening by the day. We need to ask ourselves what the heck we should do to get ourselves out of this economic mess. The answer will need to be rooted in a careful analysis of cause and effect. We need to know why we got [...]

The Fed has pulled out all the stops to fight against the severe credit crunch that first hit our economy in August. The latest salvo in this mission is the Fed’s decision to allow banks to trade $200 billion in dubious mortgage backed securities for risk-free treasurys.
But, all this has done is reinforce the [...]