William C. Dudley is the amazingly out-of-touch President of the New York Fed. Speaking in Queens today, he said the economy has improved, but a long way from improved employment and price stability.
The audience pressed Dudley about higher food prices, wherein Reuters reports “people forget that even as the price of food is rising, other prices are falling. He mentioned the price of the iPad 2, prompting guffaws from the audience.”
This whole commodity price thing is temporary he said. “While rising commodity prices may be giving some of you a bad headache, they are not likely to lead to a sustained rise in inflation to levels inconsistent with our dual mandate,” Dudley said.
After earning his PhD at the University of California, Dudley worked for the Fed. Then he went to work at Goldman Sachs where he was the firm’s Chief Economist for a decade. The is was back the New York branch of the Fed in 2007 and was made CEO in 2009.
Mr. Dudley has plenty of tools over there in the Fed garage that will keep inflation in check. “We are very, very confident that those tools will be completely effective at keeping inflation in check,” he said late last year defending the Fed’s QE2 policy. “We are completely willing to use those tools, when the time comes, to prevent an inflation problem. Higher inflation is not a way out. It is not a solution.”
“The problem with a price-level target is that it’s difficult to explain what you’re doing in a way that doesn’t create larger anxiety about the long-term inflation target,” he said. “We clearly want people to understand that we are committed to price stability over the long run.”
The Fed is committed and prices are stable. If you don’t believe it because the price of your groceries are going up, then the guys running the Fed would say these price movements are just too difficult for you to understand.
{ 22 comments }
Meanwhile, in Canada… A female “economist” on CBC attributes a rise in food and oil prices as an effect of a recovering/booming economy. Pay no attention to 2010 being a catastrophic year for agriculture.
I expect that Mr. Dudley makes enough money that he isn’t living from paycheck to paycheck, much less worrying about his own grocery bill.
If you go through the supermarket and never look at the price of what you toss in the basket, you’re probably not the right person to talk to about the impact of real inflation.
Astounding that someone in his position doesn’t realize the differences between commodities and Electronics and why one reacts so much quicker to market conditions and the other. – Blessed in an industry fairly unregulated in comparison while flourishing later in it’s product life cycle.
Qu’ils mangent de la brioche
Lol, Dudley almost seems like he could be a reincarnation of Marie Antoinette.
Except, she most likely didn’t say that. There is no record of it. It has been falsely attributed to her.
http://en.wikipedia.org/wiki/Let_them_eat_cake
It’s interesting that the Wikipedia article also mentions that there’s a Chinese tale of an emperor, who upon learning that a famine has left the people without rice to eat, responded, “If they do not have rice, why not eat meat stew?”
So it appears that the ineptitude of leaders is inescapable as exemplified by these stories from the past and present (and I’m sure future).
Possibly.
We do on another note, have considerable examples that European monarchs shied away from civil war in order to keep their power. The Blessed Charles of Austria is one example.
Not that it will do her any good, her contemporaries believed she spoke those words, among other fabrications created for her show trial.
Slight correction: Dudley earned his PhD at the University of California, Berkeley, not to be confused with the other 9 University of California campuses (Davis, Irvine, Los Angeles, Merced, Riverside, San Diego, San Francisco, Santa Barbara, and Santa Cruz).
With regard to Dudley’s comments, as of mid-January 2011, approximately 15 million iPads had been sold to date. While that level of sales in only 9 months is an amazing feat, it still accounts for less than 15% of all households in the U.S. (roughly 105 million). And odds are, many households that have 1 iPad also have a 2nd or 3rd. So 15% is likely a gross overstatement of how many households actually own an iPad.
With that said, I find it interesting that an iPad would be included in any typical “basket of goods” used to measure inflation. In doing so, actual inflation for 90+% of households is understated, and especially so for lower income households for which food costs are a significant portion of household income.
He confuses deflation due to entrepreneurial efficiency and efforts (group1) and inflation due to Fed influence (group1). If the first group is more successful than the second group then we will see a deflation even if the Fed inflates. Inflation by group 2 can be tamed somewhat by group 1, but that doesn’t mean group 2 isn’t printing money like krazy!
“We clearly want people to understand that we are committed to price stability over the long run.”
This guy is right up there with the other “pinhead” economist from the FED and Bernanke when he said that higher food prices would be offset by lower wages. These guys all live in some kind of long-run aggregate fantasy land.
Keynes is known to have said that in the long run we’re all dead.
Well, as Rothbard pointed out, Keynes died, and he left the rest of us with the long run.
Keynes was, BTW, outlived by his father with more than three years.
I just hope he continues to go out into the public so someone can make a citizen’s arrest of the counterfeiter!
In regards to iPad, I think it was very significant that it’s price was not lower than that of original iPad. We have had constant price deflation in computer products over the past 20-30 years. Seems like that this trend has stopped…
Well, the Ipad got cheaper, and the Ipad2 offers better hardware for the same old price of the 1st Ipad, so it was a deflation hardware power wise.
Paul, eat some cake and stop worrying about the price of bread and iPads. Get with it, man.
Ah, their retarded dual mandate. To worry about employment too. No other has industrial countries have that.
That’s so true. They seem to completely disregard the possibility that they’re wrong; to them, any rightful critic ‘just doesn’t understand’. Comments like this ipad one epitomize their demagoguery. They don’t pursue truth in their statements, rather they try their best to fake a reality where they’re right.
http://www.youtube.com/watch?v=oAiFcs55e0k
Nothing to see here. Move along. Nothing to see here.
If you look at the decrease in size of the IPad 2 over the IPad then you are actually getting less for the same price. But then again they packed more power into a smaller package so I guess the same price is actually deflation.
Doesn’t help at the pump though.
Comments on this entry are closed.