Gas is $5 in the little town where I live - at least 91 octane, the stuff I have to put in my turbocharged car, is - and CMG's food input costs have gone up 32% in the last year, according to their recent earnings transcript.
Given these facts, I am delighted to learn that inflation is under control. See, Mr Bernanke uses the 'core' CPI to track this, on the way to accomplishing his quest for low inflation of 2% and sustainable rates of economic growth and structural unemployment.
Core CPI excludes food and energy. This has always been explained away as being because food and energy prices change a lot - they are 'volatile' - and so they throw off the CPI numbers.
I look at it differently. I find that food and energy are pretty much the two things that I have to pay for as a consumer - remember, this is the 'consumer' price index. I have no discretion about whether or not I have to pay for food and energy. And I don't just mean my electric bill when I say energy; energy costs go into nearly every good and service that I buy.
Because of these increases in costs, the static, unchanging money that is sitting in my bank savings account can purchase significantly less of the goods I need, than it could last year at this time. Because of Ben's low rate policy, the money in the savings account doesn't grow. And also because of his low rate policy, the costs of food and energy are dramatically inflated.
Low rate policy - called fiscal accomodation, or quantitative easing when the goal is to dip the real interest rate below zero - is a property tax. I suppose we should be happy about it, because it is very progressive tax - it hits hardest where there is most cash on hand, and that's rich folks. But I'm not happy about it. It means my optimal strategy is to live hand to mouth and throw free cash into equities because at least they have a chance of keeping up with the inflation rate in their prices. I don't like that; it makes me feel like I'm being bullied by my feudal lords into doing only what they want with my money.
On the other hand, maybe it's a good thing. As Devo says, freedom from choice is what you want.