Click to enlarge.
If the Fed can keep the consumer price index growing at a stable and predictable pace then the following must be true.
1. If the inflation adjusted price of goods goes down, then the inflation adjusted price of services must go up.
2. If the inflation adjusted price of goods goes up, then the inflation adjusted price of services must come down.
Those betting on the long-term strength of our *service* economy should probably keep these two rules in mind (as should the hyperinflationists).
The following chart shows the historical Consumer Price Index for All Urban Consumers: Services minus the Consumer Price Index for All Urban Consumers: All Items.
What a ride that was. Or is the ride just beginning? Here comes the musical tribute!
My hands are definitely up. I'm also waving the new French flag. It's a white cross emblazoned on a white background!
And why might France want that new flag? Ouch!
See Also:
Charting the Health of Our Service Economy
Source Data:
St. Louis Fed: Custom Chart #1
St. Louis Fed: Custom Chart #2
Here's a slightly different view of the situation (though not necessarily a more correct view).
ReplyDeleteCONtrary to its actual mandate, the Fed has allowed banks to create a new and improved race to the bottom. It's a battle between labor and credit for commodities.
Labor doesn't have a chance! It's Gov't debt for the win!
mab,
ReplyDeleteI'm having a David Lereah moment.
With interest rates so low, humans have never been more affordable!
Sigh.
With interest rates so low, humans have never been more affordable!
ReplyDeleteAnd it's never been easier to save for retirement.
With dot.com stocks, people lost 100% of their investments. With leveraged housing investments, people lost > 1000% of their investments. No worries, the Fed made sure the creditors didn't lose a penny.
It's all for the greater glory of Wall St.
mab,
ReplyDeleteWith dot.com stocks, people lost 100% of their investments. With leveraged housing investments, people lost > 1000% of their investments.
They say the trend is your friend.
10,000% here we come!!
They say the trend is your friend.
ReplyDeleteI think I know who "they" are.
Here's what we know for sure. There are at least two of them!
ReplyDeleteThe trends are your superfriends! :)
ReplyDeleteOh yeah, THEY are our friends!
ReplyDeletemab,
ReplyDeleteThe feeling is definitely there. It's a new morning in America... fresh, vital. The old cynicism is gone. We have faith in our leaders. We're optimistic as to what becomes of it all. It really boils down to our ability to accept. We don't need pessimism. There are no limits.
THEY Live off of others. They also lie.
ReplyDeleteGov't sponsored parasitic finance for the win!
mab,
ReplyDeleteGov't sponsored parasitic finance for the win!
Banksquito
The convict soon mutates into a mosquito-like monster, which sucks its victims dry.
I could do this all day, lol. ;)