People will eventually question me as to Why I consider this Bad News, coming as it does after reports from New York and Philly. It is all about the question of Quantitative Easing. Understand that Markets are strange creatures, Those involved believing quite correctly that Profits in Markets comes from anticipating the market trends. QE does not have effect once it is introduced, but after that Period when Participants are sure that QE will eventually take place. What I am getting at here is that QE has already been priced in, as the leading Market pundits would put it. The Reports can already tell you that QE has been a flop. Positive expectation of the QE had already been in place for over two months, and there has been no business expansion.
All indications remain that We are in decline, and I bring forth that old trash, Stagflation, to discuss the Inflation levels in all the sectors which Bernanke considers should not be considered. He sees Deflation everywhere there is no Inflation, and Inflation nowhere where it is. It seems that Prices are going up everywhere, except in the Paychecks of 95% of Americans. What amazes me is that the Fed accepts the Statements of Business, where Deflation is counted where Sales cannot be garnered where Business had desired Pricing schedules to be; accounting the failure of desired Price increases to be deflation. Business and the Fed considers it to be Deflation when Prices remain identical with previous years.
I am quite sure I will face much outrage at my expression of this datum, though it is not to say it is untrue. Business may think there is justification for their view, when they face higher Prices which they must meet while their own Pricing must remain the same. I, on the other hand, would account this simply to be a ceiling on the Profits they can extract from their industry; meaning that Corporate Pay Packages cannot continue their astronomical rise. My disappointment with the Fed enters when I conceive of this feature being a natural economy trying to redistribute Operating Profits to maximize Production; with the Fed seeing this factor as some defeat of economic performance which must be altered. lgl