No surprises here, just depressing to see some actual numbers. The government is printing money (increasing M3) to pay for its spending habit. This makes the wage you work for and each dollar you have saved worth less. They soon will hide the crime by discontinuing publishing the M3 numbers.
March 07, 2006
Is the Inflation Camp on the Bubble?
by Kevin Duffy
http://www.safehaven.com/showarticle.cfm?id=4729
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This brings us back to our original inflation-deflation debate. After throwing the inflation switch on full throttle, the Fed has backed off somewhat with 14 "measured" rate increases over the past 20 months. Why? Perhaps they no longer believe their own sales literature. As the table below shows, the official inflation measures are grossly understated. Over the last five years, prices for practically everything have exceeded the CPI, driven by rapid growth in money and credit. (The lone exceptions: grains and large-cap equities, which were held back by the deflating 2000 technology balloon.) Notice that the inflation aggregates still experienced strong growth in 2005 despite higher rates.
Inflation in the United States, 2000-2005 (all figures annualized)
Category , Source/Index , Last 5 Years (2000-2005) , Last Year (2005)
Housing , OFHEO Index , 9.10%, 11.60%
Large-cap Equities , S&P 500 Index , -1.10%, 3.00%
Small-cap Equities , Russell 2000 Index , 6.80%, 3.30%
Credit-related Equities , Bearing Credit Bubble Index , 8.00%, -4.50%
Commodities , CRB Index , 7.80%, 16.90%
Oil , West Texas Intermediate , 15.60%, 30.20%
Grains , Dow Jones-AIG Grains Index, -6.40%, -4.70%
Gold , London PM Fix , 13.50%, 17.80%
Luxuries , Forbes CLEWI , 4.60%, 4.00%
Fed Holdings of U.S. Gov't Securities , Federal Reserve , 7.60%, 3.70%
Money Supply , M3 , 7.20%, 7.30%
Mortgage Credit , Flow of Funds , 11.70%, 12.90%
Official Inflation , Consumer Price Index , 2.40%, 2.90%