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Source link: http://archive.mises.org/8025/were-in-the-double-digits/

We’re in the double digits

April 15, 2008 by

The Producer Price Index is out and it shows a change in intermediate goods in March 2008 from 12 months ago (unadjusted) at a 10.5% increase. This follows a 8.8% rate of increase in February and January.

Focusing on energy alone, the news is devastating: “The intermediate energy goods index advanced at a 46.4-percent SAAR (Seasonally Adjusted Annual Rate) from December 2007 to March 2008 after moving up at a 50.6-percent SAAR during the final quarter of 2007.”


Robert Wegner April 15, 2008 at 9:06 am

Paging Gary North.

Say it isn't so!!! April 15, 2008 at 9:09 am

But Ben and before him Alan assured us that INFLATION IS LOW!!!!

Say it isn't so!!! April 15, 2008 at 9:09 am

But Ben and before him Alan assured us that INFLATION IS LOW!!!!

Fred Furash April 15, 2008 at 1:21 pm

You think that’s bad?

In the UK, the PPI is above 15%, and has been for some time now.

Fred April 15, 2008 at 3:13 pm

Robert, I’m glad you mentioned Gary North. He’s been going on and on about how the money supply is contracting and that we’re about to enter a deflation, and that the gold price will fall. This doesn’t square with what is being said by other observers, such as Austrian economist Peter Schiff and John Williams, who runs shadowstats.com (where he fixes all the fudged government statistics). Schiff and Williams both expect inflation (actually, an inflationary depression).

Robert Wegner April 15, 2008 at 3:26 pm


My problem with Gary is that he simply doesn’t address why M2 is soaring. The most recent 3 month annualized growth is at 12.5%.

He has jumped on the monetary base and M1 as the legitimate indicator of money, when in fact the nature of the monetary base has changed because banks are sweeping funds into M2, further, there is a very strong possibility that the underground European market is moving from the dollar to the euro.

My quip about paging North was more becasue of his attack on some critic and Gary’s criticism based in part on one blip downward in gold and the CPI. Kinda like Bush declaring vicory in Iraq.

RKArmour April 15, 2008 at 6:38 pm

I’m curious about the market for Princes and why we would need an index… Otherwise, I appreciate the post.

DS April 16, 2008 at 5:58 am

I work for a global company that does heavy equipment manufacturing. We have been told by our ALL of our suppliers that we should expect a 30% increase in steel prices in the very near term. We have a strong bargaining position with most of our suppliers and they have eaten most of the increases over the last 2 years, but they have told us flat out (all of them, not just one) that either we pay 30% more for steel parts or they they stop doing business with us. We have gotten the same message almost uniformly from large and small suppliers who have no connection to each other, almost in unison.

In response we will have to raise our finished goods prices an average of 12% just to break even. We believe that our competitors will have to do the same but in the short run we are expecting to lose volume and market share when we announce this increase. In other words our productivity and profitability is about to decrease.

Multiply this by millions of companies around the globe and you can see the results: increased prices, lowered profitability and productivity.

Laying people off may be the next step around the corner.

Dave P April 16, 2008 at 7:26 pm

Indeed, Gary North and Mish Shedlock both are ardent deflationistas and Mr. North in particular has a very thin skin and seems to delight in insulting his subscribers and anyone who disagrees with him.

Neither of these men take any account of the tens of trillions of foreign dollars that are not measured by the Fed, and which flow around the world at the speed of light. Correct me if I am wrong, but doesn’t the Fed only measure “bank accounts” and not non-bank accounts? If Allen Greenspan admits to not knowing what money is, it becomes a stretch to believe that they know what inflation is (rising prices, right?)

And then there’s today’s WSJ article revealing that the LIBOR rate is suspect because it has been determined that banks are lying on their reports because they don’t want anyone to know they’re paying very high rates. Golly, imagine that, banks lying!

John Williams using the 1980 model puts inflation at 11.4%. One has only to look at what international dollar inflation is doing to nations around the world, to understand that for a while we escaped the consequences of massive credit inflation by exporting dollars. Those consequences are now returning to us in the form of BOTH inflation and deflation. They are opposite sides of the same coin. Perhaps some day the economists will figure out what we laymen understand by common sense, something of which there seems to be a shortage.

Robert Wegner April 17, 2008 at 4:26 pm

Dave P,


Mr. North in particular has a very thin skin and seems to delight in insulting his subscribers and anyone who disagrees with him.

I can remember way back when North used to travel the country for Pacific Coast Coin Exchange (1971? 1972? ), giving speeches correctly warning about inflation. I was a little young back then (not even old enough to drive), but managed to attend a couple of his presentations. Back then, he was on the attack against Richard Burton and Elizabeth Taylor, whom he referred to as “That woman.” Burton had bought her a huge diamond ring, North would roar something like, “That’s not a sign of love, that’s an inflation hedge.”

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