cam, 226 words, 0 comments, Energy, Gas, Inflation

I payed $4.45 a gallon today for 91 octane gas. Nearly a 20c jump in the space of a week. We are getting into high inflation territory that places like Zimbabwe suffer from where you have to fill up all your cars at once because it will be higher tomorrow. Not cool. That is a facet of an economy losing control.

The price will come down to an extent, speculators can only survive for so long before any bubble pops, however this inflation is driven by both fundamentals, such as China and India consuming more oil, as well as the US government printing money like there is no tomorrow. When bad policy mixes with known bad circumstances the result is a mess. (more)

cam, 156 words, 0 comments, Gas, Inflation

I payed for $4.25 for premium at the pump tonight. Surprised me that it had leapt 25c in the space of seven days.

Apparently supply is not keeping up with demand. Worse, it appears that the petroleum products dropped 2.5% in supply despite a 57% increase in prices. The market adage that the cure for high prices being high prices is not working in this instance. (more)

cam, 163 words, 3 comments, Gas, Inflation, Petrol, Energy

I keep my receipts being somewhat of a data hound. Fueling up the other day I noticed that a gallon of premium gas was $3.92 USD - perilously close to the four dollar mark. I decided to graph my petrol receipts for the last month.

It has been a rapid and bumpy climb; a trendline 50c increase in less than thirty days. The high amount of inflation is real especially if I am noticing it each time I fill up. We aren't quite to the level that the Cunning Realist notes of high inflation economies (ie order two as the second will be more than the first), but there is no price stability if I am paying more each time I go to the pump to fuel up. Is it a failure of the federal reserve or the energy market? (more)

cam, 343 words, 0 comments, US Federal Reserve, Inflation, American Conservatism

This article is correct, but it is also an inside window into the fall of American conservatism. It is written in populist terms with some mythical conspiratorial elite and supposedly non-elected policy makers:

That is the deal the Federal Reserve has made on behalf of the public. It's the latest chapter in the socialization of risk and its corollary, moral hazard.

Anyone who works long enough on Wall Street knows, at least subconsciously, that this is the way things work: if the going gets tough, a small coterie of unelected and mostly unaccountable officials in Washington will probably decide that your employer is too important to fail.

In an effort to keep that from happening, wages, savings, fixed-income streams, and Social Security checks will be inflated away to "ensure the stability of the financial system."

I agree that this risk shouldn't be socialised, and there was a time when US policy makers would let big companies fail without being bailed out, however this article serves more as insight into conservatism's lost nature. You can imagine a populist like Chavez railing against the government with the same language. (more)

cam, 247 words, 9 comments, Gas, Petrol, Inflation

Paid $3.79 USD a gallon yesterday making this quickly out of date.

Despite appearances my car is pretty easy on petrol averaging 23 to 24 mpg in commuter driving and nearly 30 mpg when on the highway. Better than a family sedan, most smaller cars and certainly an SUV. The issue isn't the gas price itself, it is the rabid inflation that has come with gas prices recently. It was not long ago when I came to Arizona that I was paying $2.50 a gallon. (more)

cam, 205 words, 2 comments, Inflation, Interest Rates, Australia

Barry Ritholtz argues that the US Reserve Bank is the only one that makes interest rate movements based on core inflation. This is an inflation reading without all the inflationary bits in it and can be traced back to President Carter's time. Inflationary stuff like energy costs and food are removed from it. Ritholtz considers this indefensible. As to the recent increase in interest rates in Australia:

Unlike the spendthrifts here in the US, other Central Bankers around the world understand what the true definition of inflation is. Consider the following: The Reserve Bank of Australia hiked rates to an 11 year high (due to inflation concerns). And, Miller Tabak's Peter Boockvaar points out that, over the past month, Iceland, Romania and Mexico have raised interest. While the RBA move was expected, the Australian $ rallied to a 23 1/2 yr high vs the US$.

The US bailing out of speculation by lowering interest rates and making money cheap was known as the Greenspan put, it is now getting known as the Bernanke put too. Ritholtz believes that this policy goes against the Reserve Bank's mandate for price stability. Consequently the US Reserve is directly contributing to inflation and a weak US dollar. (reply)

cam, 79 words, 0 comments, China, Inflation

Big Picture has an interesting post on inflation in China. Food is running at 18% inflation with meat and poultry at 49%. (more)

cam, 296 words, 2 comments, Inflation, Policy, Strategy

I must admit to being a little bit surprised to see the strong trend downward on this graph. It suggests that there has been a consistent strategy to lower and stabilise inflation over the last forty years. Judging by the trend it has been a very successful one.

I can recall a historian saying, "it doesn't matter who the leader is as long as the strategy is correct." (more)