Tuesday, February 20, 2007

Finally - Someone Who Knows

What "inflation" is -

Cause and Effect

So when Bernanke talks about temporary ``factors'' boosting inflation, he is really talking about temporary ``effects'' of higher oil prices on the CPI. Oil prices don't cause inflation. Nor do wages, even though you'd never know it from discussions on the subject. The Fed causes inflation all by itself, creating too much money relative to the supply of goods and services.

Fed's Inflation Analysis Ranks With Zimbabwe's: Caroline Baum

It's a good read on Bloomberg.