Tuesday, March 01, 2005
The Truth, Lawrence Kudlow. The Truth!
Yes, sometimes commodities flash inflation-warning signals. But other times commodities are better used as indicators of the global economy. Today it is the world economy that is placing higher raw material demands on commodity prices, not inflation.If demand is causing an increase in commodity prices, those increased prices get passed along in all uses of that commodity and we experience rising prices. If the price of oil goes from $25 per barrel to $50 per barrel everything made from oil is going to reflect that raw material. Now, technically inflation is really an increase in the amount of money in circulation. Greenspan has increased the money supply at a faster rate than any of his predecessors, credit creation has exploded, yet the government tells us there is no inflation. Rather than deny the truth, Kudlow wants us to believe something silly. He should ask himself who benefits with official inflation at only 2%? He should look to the prime indicator of inflation, Gold, and ask why is the government deliberately capping the price. He should ask why gold can only go up $6.00 in a day, but can fall any amount. Who benefits by keeping our alarm bells silent. You and I buy things every day and we know the truth. We are experiencing rising prices and they are rising faster than 2%.