Friday, March 11, 2011

Queens to NY Fed Prez: We Can't Eat iPads

More on the arrogant New York Fed prez Bill "Former Goldman Sachs" Dudley and his speech in Queens.

According to Reuters, members of audience got upset with his argument that price inflation was not a major problem:
In Queens, New York, on Friday, New York Fed President William an earful.

After being bombarded with questions about food inflation, Dudley attempted to reassure his audience by putting rising commodity prices into a broader economic context -- but that only made matters worse.

"When was the last time, sir, that you went grocery shopping?" one audience member asked.

Dudley tried to explain how the Fed sees things: Yes, food and energy prices may be rising, but at the same time, other prices are declining.

He then stretched for a real world example. The only problem was he chose the Apple's latest tablet computer that hit stores on Friday, which may be more popular at the New York Fed's headquarters near Wall Street than it is on the gritty streets of Queens.

"Today you can buy an iPad 2 that costs the same as an iPad 1 that is twice as powerful," he said."You have to look at the prices of all things."

This prompted guffaws and widespread murmuring from the audience, with one audience member calling the comment "tone deaf."

"I can't eat an iPad," another said.
What Dudley is doing here is failing to acknowledge what real price inflation is. Bloomberg columnist, Caroline Baum, clearly makes the point that a supply shock increase in oil prices does not cause broad based price inflation, the reverse applies in the case of technological innovation, it does not reduce broad based price inflation.

In fact, the BLS attempts, though in a ham-handed fashion, to adjust for technological innovation when it reports prices.

Dudley should understand this. He was the chief economist at Goldman Sachs for a decade and received his doctorate in economics---even though it was from the University of California, Berkeley.



  1. Is there a video of this somewhere? I would love to see it.