Two inflationary days

Producer prices rose 1.7 percent in August, but the Fed went ahead with QE3. Is the US economy about to experience some serious inflation?

Bob Gathany/The Huntsville Times/AP/File
People help assemble helium balloons for John Ninomiya, to connect to using a harness, during the Alabama Jubilee Hot Air Balloon Classic in Decatur, Ala in this 2006 file photo. Karlsson argues that the Fed's actions are setting the US economy up for a serious bout of inflation.

First we hear that U.S. producer prices rose 1.7% (annualized 22.4%) compared to the previous month in August.

Then Ben Bernanke said that wasn't enough, so he will take his helicopter, model QE3/QE5, out for a round.

Then the Fed stated that money supply rose 0.3% the latest week alone, causing the annualized 3 month gain to increase to 8.6% and the yearly gain to increase to 7%.

And then the U.S. consumer price index rose 0.6% (annualized 7.4%) in August.

And as a result of Bernanke's new Helicopter tour, the dollar has plunged, while commodity prices have soared while the yield spread between regular and inflation protected U.S. treasuries have soared.  The yield on the 5-year inflation protected "security" is now by the way as of this writing -1.66% (do note the minus sign), illustrating the point I've repeatedly made that the only thing safe about them is that those who invest them will lose part of their savings.

So, it is clear that unless the European debt crisis again worsens and again causes a surge in demand for dollar  assets, there will be a big increase in price inflation soon.

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to

QR Code to Two inflationary days
Read this article in
QR Code to Subscription page
Start your subscription today