"Where are the inflation vigilantes when we need them?"

[On the Road]

Bond traders used to push rates higher at even a whiff of inflation, but with signs of rising prices now everywhere, they're overwhelmed by our desire to borrow our way to prosperity.

----snip

On its op-ed page last Tuesday, the "New Economy Journal", aka, The Wall Street Journal, saw fit to allot a couple of column widths to Jeremy Siegel. He is another high priest from the bubble, a buy-stocks-all-the-time-and-for-the-long-run bull who folks still seem to think is thoughtful. His latest effort is a completely nonsensical argument about why inflation pressures and problems don't matter, because the bond market hasn't revolted yet. Fast and easy. In essence, his "logic" boils down to this: If we are pursuing an insane policy but the bond market hasn't freaked out, we should keep it. That's a little bit like saying drunk drivers shouldn't amend their ways so long as the police don't catch them.

----snip

Commodity prices are rapidly increasing; the Commodity Research Bureau index of actively traded commodities is now at a level not seen since the inflation bubble of 1980. Oil stays stubbornly high, near $40 per barrel, and the Journal of Commerce Index of lightly processed commodities, once a favorite Greenspan indicator, has soared to an all-time high. And although the dollar has stabilized, it is down 25% against a basket of currencies since early 2002. Finally, the real Fed funds rate has been negative for two years and, relative to real economic growth, the most negative since the inflationary '70s.



http://www.iraqwar.ru/iraq-read_article.php?articleId=43008&lang=en

[cornfedyank]

1. i do not understand the term stagflation..

.. when i first heard it 25 years ago..i thought how could that happen? now i see it, but it's probably too late to stop.

[On the Road]

2. Stagflation is No Mystery

It's a result of increasing commodity prices. In an overheated economy, inflation just perpuetuates growth. But if commodities are scarce and expensive, you get no growth AND inflation.

In the 70's it was oil. In some countries, it's crop failure. Now, it seems to be building materials -- and across the board as well.