Ding Dong the Witch isn't Dead
With this week's release of an apparently benign CPI report, Wall Street resembled Munchkin Land celebrating the death of the Wicked Witch of Inflation. Amidst the revelry few spared much concern that the Index actually registered a monthly gain of .6%. Since such a rise equates to an annualized inflation rate of 7.5%, how could the Wall Street Lollipop Guild be so euphoric? Simple; to pronounce the Witch sincerely dead, one needs only to consistently strip out marginally needed items such as food and energy. Without these "distractions" the core CPI increase can be shown to be only .1%: "way" below the .2% that had been forecast.
In the face of what was in
reality a horrific March CPI report, Wall Street once again demonstrated
its ability to spin economic straw into gold. The trick to making
a 7.5% annualized inflation rate disappear is simply to misdirect
attention towards meaningless monthly core numbers instead.
The next trick up Wall Street's sleeve will be an attempt to minimize, or eliminate, the pesky problem of rising rents, which account for close to 40% of the "core" CPI. Surely many will suggest, as some already have, that we strip out "rents" from the core, thus adding shelter to food and energy as unimportant expenditures. They will argue that since rents are rising abnormally, as a result of the deteriorating housing market, that they are no longer a valid component of true inflation (None of these arguments were put forward when rents were falling as a result of the housing boom). Hopefully when this self serving argument gets its wider rollout, more people will begin noticing the man behind the curtain.
April 20, 2007
More importantly, make sure to protect your wealth and preserve your purchasing power before it's too late. Discover the best way to buy gold at www.goldyoucanfold.com, download my free research report on the powerful case for investing in foreign equities available at www.researchreportone.com, and subscribe to my free, on-line investment newsletter.
Mr. Schiff is one of
the few non-biased investment advisors (not committed solely to
the short side of the market) to have correctly called the current
bear market before it began and to have positioned his clients
accordingly. As a result of his accurate forecasts on the U.S.
stock market, commodities, gold and the dollar, he is becoming
increasingly more renowned. He has been quoted in many of the
nation's leading newspapers, including The Wall Street Journal,
Barron's, Investor's Business Daily, The Financial Times, The
New York Times, The Los Angeles Times, The Washington Post, The
Chicago Tribune, The Dallas Morning News, The Miami Herald, The
San Francisco Chronicle, The Atlanta Journal-Constitution, The
Arizona Republic, The Philadelphia Inquirer, and the Christian
Science Monitor, and has appeared on CNBC, CNNfn., and Bloomberg.
In addition, his views are frequently quoted locally in the Orange