Once again, economists, bond market analysts, and maybe Alan Greenspan, chairman of the Federal Reserve, are trying to convince their fellow citizens that the emperor has a full wardrobe.
Just over two years ago this crowd, led by Greenspan, detected the stirrings of inflation invisible to most people who have to live with the consequences of higher interest rates. Seven times over the next year central bank policymakers raised short term interest rates, stopping in 1995 to admire their handiwork and proclaim the economy was proceeding toward a soft landing, not a recession.
Some three small rate cuts later, the Fed chief is reportedly satisfied that inflation is under control.
Thus the naked truth revealed last week that wholesale prices had jumped 0.5 percent in March and consumer prices by 0.4 percent was covered by the economic fraternity with the usual dismissal that the increases had come in the volatile energy and food sectors.
Maybe they don’t have to eat or drive or heat their homes, but for the rest of us those items account for around one quarter of our cost of living.
