Tuesday, May 24, 2011

Now Fed's Duke Warns on Gasoline Prices

Yesterday, St Louis Fed President James Bullard said that more attention should be paid to the CPI, than to core inflation, because food and energy prices that are not part of core inflation impacted "households and businesses that experience important price changes every day."

Now, Fed Governor Elizabeth Duke is warning about the impact of higher gasoline prices. In a speech today, before a Boston Fed sponsored conference, she said:
Family incomes have not kept pace with rising costs, and many families, particularly those with low-to-moderate incomes, are actually facing the decision between buying gas to drive long distances to work and paying their mortgage. Foreclosures remain high in these areas where the cost of driving to work has become so great.
This may all be coincidence, but when two Fed members start worrying about oil prices, within a day of each other, I smell some kind of policy change coming. It's not clear what's behind the new focus on energy/gasoline prices, but we are likely to find out soon enough.


  1. Do they sense "Stagflation" is on the way? Or perhaps they're preparing the groundwork for price controls of some kind or another?

  2. But I thought inflation was supposed to be a good thing because wages would instantly rise to cover the higher prices. You're telling me that the computer models of the economy that the experts have constructed do not actually reflect reality? Balderdash!

    You Australian Economics guys need to learn some math and be good little scientistic empiricists.

  3. Maybe they really just don't know anything and are just doing this to hedge their bets and appear more in touch with reality than the Bernanke/Greenspan team that didn't see the bubble they fueled?

  4. Sometimes it seems like coordinated evil and other times I get the impression they're all a bunch of knuckleheads who really believe in Keynes' General Theory and don't know WTF they're doing.