Skip to comments.Where Inflation Lurks
Posted on 07/12/2010 5:35:35 AM PDT by bert
Ben S. Bernanke, the federal reserve chairman, worries about deflation. Vincent Hartnett Jr. does not. The president of Penske Logistics in Reading, Pa., he oversees a fleet of 3,000 trucks and drivers, and wherever he looks, Hartnett sees higher costs creeping into the picture.
New federal safety regulations kicking in later this year will load expensive recordkeeping tasks on companies like Penske--at the same time as tougher pollution regs require them to replace retiring four- to six-year-old trucks with units that cost 10% to 15% more. The driver pool is also shrinking as the feds crack down on unsafe drivers and illegal aliens. Consultant FTR Associates in Nashville, Ind. estimates that the industry could be short 400,000 drivers by the end of next year.
At the moment wage demands are dampened by unemployment. But eventually they may go up as workers make a futile attempt to maintain their standard of living with dollars that are steadily losing value. Economist Brian Wesbury with First Trust Advisors thinks inflation will rise to 4% this year but could spike to 6% within the next few years as the Fed is forced to monetize, or buy with freshly printed dollars, a chunk of the federal debt that foreign investors will no longer be so willing to own. In the meantime Wesbury is watching figures like capacity utilization, which has risen 6.4 percentage points since last June to 74%, the fastest 11-month increase since 1983.
(Excerpt) Read more at forbes.com ...
My view is that in the mid to long term, inflation will be the political salvation to the debt problems.
Charts from the article
Yeah, the ChiComs are going to be so happy when we pay them back ten cents on the dollar.
There are enough deflationary moves in the economy that would offset many of the inflationary forces.
(Hoarding capital for one.)
The Government wants inflation to work our way out of this mess.
I’m a supply sider. See Say’s Law.
Inflation is here now. Go out and buy a car battery, some lumber, some asphalt shingles for the roof, nuts and bolts, seeds, etc. Inflation is here but Uncle is not recognizing it with his stats.
Is Bernanke really Penske material?
I’m not sure if inflation is or is not a problem right now (I have seen evidence both ways in the last 1-2 years), but I will say that the issues mentioned here related to the trucking industry are not necessarily good indicators of inflation. If costs are rising in that industry, then I would suggest that much of this is simply a case of costs that had been artificially low for a long time (see the point about illegal aliens in the industry for a good example of this) returning to normal.
These examples are not inflation, they are prices rising because of government interference. Inflation only occurs when the Fed pumps newly-minted money into the economy. Though it has created lots of that money, almost none has gone into circulation yet.
When some prices rise, absent inflation, other prices must fall. So, we’ll have people like this guy crying inflation while others are screaming deflation. Neither will be right.
I don't know- we save old newspapers up at the cabin for firestarting. Last weekend, we were there, and I started reading old the Walmart ads from 2000. I was amazed at how similar prices were to today.
So much for these so-called 'experts' trying to tell us we don't have hyperinflation already. The US already has 220% inflation and the proof is at TruthAboutInflation.com.
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