NYT: Inflation Retreating

Media criticism day continues, with the following NYT laugher: U.S. Inflation Appears to Be Retreating.   

The basis of this revelation?  Quote: "The numbers could have been worse." As Jeff Matthews would say, "I am not making this up." (I guess I shouldn’t complain too much: At least the Times bothered to include the year over year numbers of +4%).

The dueling headlines of the WSJ and NYT makes for interesting comparisons: WSJ: "Inflation is back" versus the Times Inflation Appears to Be Retreating. We can combine the two to construct this unique viewpoint:

"Inflation, which we didn’t really recognize until it had runaway, is now back. Except its not."

That, I am making up . . .


WSJ: "Inflation is back"   

U.S. Inflation Appears to Be Retreating
NYT, April 17, 2008   

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What's been said:

Discussions found on the web:
  1. Ross commented on Apr 17

    I take my hat off to you. Your know how to throw a dead zebra in front of the pride!

    The games begin…Again.

  2. SPECTRE of Deflation commented on Apr 17

    Inflation is backwards looking, and at the rate we are vaporizing credit/debt, which far exceeds new creation, we will experience far worse than slowing inflation.

  3. SPECTRE of Deflation commented on Apr 17

    Ross, LOL! It’s all about credit. Credit creation must always exceed the carrying cost of prior debt creation. When it starts falling, we have Hell to pay. Buy a fireproof suit because we all are gonna need one.

  4. SPECTRE of Deflation commented on Apr 17

    Take a look at all the commercial and investment banks. Look at their assets to equity. With the gearing they used, it doesn’t take much in writeoffs before there is no equity left.

  5. stuart commented on Apr 17

    The question is, what is the agenda of the NYT to run such a headline? All it does is undermine their credibility.

  6. Francois commented on Apr 17

    Is it inflation we’re talking about? Or rising prices?

    Mish’s take:

    “Energy and food are two places where rising producer costs are passed on to the consumer. Some people mistake this for inflation. It’s not inflation.

    Unless there is an increase in money supply and credit, what goes up somewhere must go down somewhere else. This is simple arithmetic and it’s amazing how few get it. Credit (marked to market is contracting rapidly). Money supply, measured accurately, is barely moving. Therefore, what goes up somewhere is falling somewhere else.


    Here is the reality: Prices of things we absolutely need are rising (food and energy). Prices of things consumers are stuck with (houses and stocks, the latter via 401Ks and company options) are falling. This can go on longer than anyone thinks.”

    In any case, Mish’s analysis is only partially true: cost of Chinese made products are set to go up in price too. And the Fed mandate of price stability is out of the window for God knows how long.

    We’ll live in The House of Pain for a while I’m afraid.

  7. michael schumacher commented on Apr 17

    that’s assuming that the NYT HAS any left.

    They have not for years..


  8. blin commented on Apr 17


    Any idea which banks are most vulnerable for the next downturn?

    I read (at some other blog) that WFC has a disastrous balance sheet, they have no chance of recovery because of their holdings in the Cal market…they reported yesterday, but…who really knows?

    Also COF’s chart looks terminal…they are reporting today.

  9. michael schumacher commented on Apr 17

    mishs’ analysis are flawed from the start….

    He dismisses that the fed is not printing money simply because he can’t find any “evidence” of it. I guess continuing to weave yet another bubble on the back of created money ( via the numerous “auctions” the fed conducts) is somehow not creating money out of thin air…as if the intended result of “inflate” does not create money in the hands of the abusers in the first place.

    Mish is FOS….


  10. ndd commented on Apr 17

    I don’t think inflation is retreating yet, but there are grounds to believe it will start to within the next few month — too long to repeat here, but if you care to see the graphs, I’ve laid out the argument here:

    A second point: this recession looks a lot like the 1980 recession (which was part 1 of a 2 part act). We know that recessions tend to occur after a yield curve inversion (check!) and also after a period where M1 money creation is less than the CPI (what Mish calls M prime) (check!).

    In both 1980 and 2007, the Fed response was to lower Fed funds rates. As a result, the yield curve quickly un-inverted (check!) but even long bond rates became lower than the CPI (check!). The recession shortly ended, and inflation for a time abated, before returning with a vengeance in 1981-2 (to be determined).

  11. stuart commented on Apr 17

    From Russ Winter’s piece this morning too:

    “And with taxes collected, and nothing but huge whodathunk outlays ahead, who’d a thunk that Treasury note and bond yields would start to resemble an oncoming tide?”

    Bucky slide to continue and prices to continue to rise. I am wondering quietly what happens in the summer when Treasury can’t raise the cash to finance its needs.

  12. Chief Tomahawk commented on Apr 17


    Dennis Kneale just went bearish on Google!

  13. Douglas Watts commented on Apr 17

    NYT’s circulation declines are also “retreating.”

    They are not as massive as they could be.

    I love the “new journalism.”

  14. ReturnFreeRisk commented on Apr 17

    On deflation:
    If the inflationary impact of huge amounts of debt were minimal (as argued by many on the way up), then how can the debt writeoffs produce deflation much larger than the inflation we experienced on the way up? I agree with the deflationary impact of debt writeoffs. Just don’t agree with the magnitude. THis is the kind of asymmetric arguments that have landed us in this hot soup.

    Wait, soup is getting too expensive.

  15. me commented on Apr 17

    Everybody is worried about inflation in China. I see their inflation rate was 8% but 6.8% of that was food. Now they should take a lesson from Ben and discount food and then they too have no inflation. Dumb Chinese never heard of “core”.

  16. Steve commented on Apr 17

    If we accept that we have higher inflaction going forward and the ever weakening dollar how come the 10 year bond price is so strong? If inflaction is so high and the dollar so low I would think people would be selling dollars like crazy…what gives?

  17. stuart commented on Apr 17

    “it’s our dollar, but your problem”. Gotta prop it up when you’re loaded to the rafters with it.

  18. ReturnFreeRisk commented on Apr 17

    The dollar is a parentless kid who is now being molested by his uncle Ben.

  19. Kuds commented on Apr 17

    The only thing deflating is my wallet in my pocket. I’ll tell you when that reverses.

  20. SPECTRE of Deflation commented on Apr 17

    blin, Give me some time to dig up a dandy chart on the gearing that was used per institution. Man it’s gonna be fugly. I can say that JPM is at the top of the heap.

  21. Tom commented on Apr 18

    Inflation is backwards looking…………..

    What about inflation expectation ?

  22. dave54 commented on Apr 19


    Deflation crescendo: 1930’s
    Inflation crescendo: 1979-81
    Deflation crescendo: 2003
    Inflation crescendo: 2027-31?



    (Theme from TV series “Rawhide”)



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