NewsMax has warned about the great "Inflation Lie" consistently over the last
year, but most other media commentators and financial professionals have pointed
their readers towards a false, low inflation figure.
Even the Federal Reserve Chairman Ben Bernanke has commented that his Board
expects, "inflation to decline because of a slower economy and a drop in fuel
prices."
This comment should cause great concern for two reasons: First, fuel prices are
excluded from the "official" CPI. As such, how on earth can the price of energy
affect the "official" inflation rate?
Of course, by excluding rising energy prices from the CPI, the "official"
inflation figure is understated, but how can it also help on the way down?
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Secondly, just because an economy is slowing does not necessarily lead to lower
inflation. Has Mr. Bernanke forgotten the bad old days (1970s and 80s), when we
had the debilitating economic virus known as Stagflation?
We are now not alone in our concern, at least over a rising "official" inflation
rate.
Yesterday, in a PBS interview with Charles Rose, the inflation-busting former
Fed Governor Paul Volker said he is, "concerned [that] U.S. inflation may
quicken faster than the central bank can control it." He went on, "I don't think
it's impossible that it [inflation] will build up a little momentum that makes
it harder and harder to control over time."
As a member of the British Parliament's Treasury Committee, I knew Paul Volker
when he was Chairman of the Fed. He was always very quietly spoken and measured,
almost understated in what he said.
However, in a most worrying comment Volker expressed his concern that," I am a
little concerned that there's a little too much tendency to say it's
[inflation's] under control. It's not out of control, but it's been rising
and you know, you have to be worried about that."
Volker was then teased by Rose to say that inflation may already be out of
control. But, in keeping with his quiet, responsible tone and with consideration
for Bernanke, his successor but one, Volker merely replied, "inflation may not
be ‘under control'. …I'll let you reach your own conclusions."
Later in the interview, referring to the mild inflation concerns expressed in
the Fed's September 20 minutes, Volker said, "the kind of inflation risk that I
have mentioned is very apparent in those discussions."
Well, how much warning do you need? We at NewsMax have long reached the
conclusion that inflation is rising far faster than the official CPI figures
show. We have constantly warned our readers. We are pleased that such a
formidable figure as Paul Volker now feels moved to issue a responsible warning.
For our conservative readers, we believe that the present bull markets in both
stocks and long bonds, are very dangerous. We continue to urge investors to sell
into these markets and concentrate their investment patiently in cash,
short-term bonds and an accumulation of gold.
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