Larry Kudlow has been flogging my Ben Bernanke as Neville Chamberlain quote for weeks now. So why do I think Ben Bernake is dovish on Inflation?
His view of CPI data.
Setting aside the rest of the dismal scientists idiotic obsession with the core rate of inflation, no one (outside of academia) is persuasively arguing that prices across a broad cross section of goods and services are not going higher, or the purchasing power of the dollar has slipped. One top of that, the supply demand equation continues to see the printing presses working overtime, further eroding dollar strength.
I cannot find it at the moment, but
prior to my “Neville Chamberlain” remark was some commentary by Fed Chair Ben
Bernanke’s that the CPI overstated inflation. That’s what led to
my painting him an inflation dove.
Today, we see once again a the same idea. In a letter to JEC Chair Jim Saxton, Fed Chair Bernanke reiterates the idea again.
"Most analysts believe that changes in the CPI overstate changes in the cost of living to some extent . . . The PCE price index likely is also biased upward, though probably by less that the CPI in light of PCE’ measure’s advabtages cited above.
Although increases in energy proces have pushed up overall consumer price inflation over the past couple of years, core inflation has been more stable."
In case you were wondering, I find this nonsensical.
BERNANKE’S ANSWERS TO SAXTON’S QUESTIONS RELEASE
Letter from Fed Chair Bernanke to Jim Saxton, Chair, JEC
May 24, 2006
http://www.house.gov/jec/news/news2006/bernanke statement 05-24-06.pdf
(see page 5 of PDF)