Prices Drop by Largest Amount in 56 Years

[Capitalist Pig]

http://www.washingtonpost.com/wp-dyn...500344_pf.html

WASHINGTON -- A record plunge in the cost of gasoline pushed consumer prices down by the largest amount in 56 years in November while industrial production posted a solid gain. The new government reports Thursday provided further evidence that the economy is shaking off the blows delivered by a string of devastating hurricanes. The Labor Department reported that its closely watched Consumer Price Index dropped by 0.6 percent last month, the biggest decline since a 0.9 percent fall in July 1949. It reflected a record fall in gasoline prices, which have been retreating since they surged to above $3 per gallon right after Katrina hit.

[Autolykos]

This, in spite of the Fed's determination to ward off deflation.

Amazing.

- Rob

[SteveA]

Consumer prices plunged last month at the steepest rate in 56 years because of a sharp decline in oil and gasoline prices, the government reported today, adding to other signs that the national economy has largely rebounded from the effects of the recent hurricanes. The consumer price index, a widely followed measure of inflation, fell 0.6 percent in November -- the largest drop since July 1949 -- primarily because of an 8 percent drop in energy costs, the Labor Department said. Energy prices had soared after Hurricanes Katrina and Rita disrupted oil production and refining in the Gulf of Mexico. Prices have eased since then as drilling rigs, refineries and pipelines have been gradually repaired.

When they calculate inflation, they ignore energy and housing, so when prices go up they talk abou inflation remaining low but then when prices begin to come back down they switch to using consumer prices ... :(

Also, unless I've got Alzheimers, the hurricanes had little of any impact on gasoline prices - gas prices started rising and kept on doing it very soon after victory in Iraq was declared. Hmmm ...

I'm happy gasoline prices have been coming back down but there's still plenty more room for them to drop.

[Keith Hamburger]

One of the more interesting things is that on Tuesday gold hit a 25 year high.

The whole thing with inflation, of course, is that it's all smoke and mirrors. They talk about price inflation and price deflation but there really is no such thing. Prices are just a symptom of what inflation really is. Every economist knows that inflation is an increase in the supply of money. When there's more money, and the same amount of goods, supply and demand mean that you have to spend more money to get the same products.

The problem is, while the government focuses on the price of products, behind their back, through sleight of hand, they're the ones changing the amount of money, always increasing the money supply.

It's a Wizard of Oz thing where we're continually being told to pay no attention to the man behind the curtain.

Keith

[Capitalist Pig]

Quote by: Keith Hamburger It's a Wizard of Oz thing where we're continually being told to pay no attention to the man behind the curtain.

Exactly.

[Milton Bradley]

Oddly, there are no cries of foul coming from big oil either. I guess this huge reduction in revenue does not affect operations across the board, like for example, had they not been inflating prices, and price fixing.


Comforting to know.