In a recession, prices should be falling

An Inflation Indicator Leaves the Fed in a Tough Spot


A gauge of prices paid by American producers jumped 1.1 percent in March, the Labor Department said on Tuesday, sharply accelerating from a 0.3 percent increase in February.

The increase, led by a surge in gasoline and home heating oil prices, was twice what economists had expected.

The higher prices put pressure on businesses to pass on costs to consumers, though some economists said the housing slump and weakening job market could discourage businesses from raising their prices.

“Given the weak nature of domestic demand now and going forward, it is unlikely that businesses will have as much success raising prices at the consumer level as they did in the not too distant past,” Joshua Shapiro, an economist at the research firm MFR, wrote in a note to clients.

The increases did not spread to popular products like automobiles and clothing. The closely watched core measure of the Producer Price Index, which excludes volatile costs of food and energy, rose 0.2 percent in March, falling back from an unexpected 0.5 percent rise in February.

The low core rate could take some pressure off the Fed as it tries to balance rising inflation with the overall slowdown in growth. Fed officials have acknowledged that inflation remains a serious concern, but they have signaled they will continue to focus on staving off a prolonged recession.

Comment: Prices are going up because the dollar is going down! Thus all that we import goes up.


  1. To me, this all goes back to the Bob Jones controversy. Why is this being swept under the rug?!!

    According to Wikipedia: "Jones must have quickly overcome his stage fright, however, for by 1895, as a twelve-year-old, he gave a spirited, twenty-minute defense of the Populist Party while standing on a dry-goods box in front of a Dothan drug store."

    Furthermore: "The Populist Party (also known as the People's Party) was a relatively short-lived political party in the United States in the late 19th century. It flourished particularly among western farmers, based largely on its opposition to the gold standard."

    Did anyone else catch that!? Bob Jones was supporing a group that was against the gold standard. Fiat money (money NOT backed by anything) is what causes inflation and devalues the dollar.

    Why is THIS issue not being given publicity? If Bob Jones University is against one-worldism (which is a right position), why have they not come out and said that Bob Jones Sr. was wrong to support a party that was against the gold standard!? Are they implying they are still against the gold standard, or are we to assume Mr. Jones was just a misguided youth who later on saw the error of his ways. One way a country stays strong and independent is by having a strong currency that is not easily debased because it IS backed by gold.

  2. Ahhh, I guess I'm the only one in the world who thinks this is worthwhile. I don't see anyone questionimg the BJU BOD about what exactly is their stance on the gold standard. :) It would be intersting to see if the university followed the belief of Bob Jones Sr. and believes the gold standard is bad. I like Bob Jones Sr. and what he stood for. I'm willing to give him the benefit of the doubt that he was a very misguided youth when he was anti-gold standard and that he learned the error of his ways as he grew older.

  3. Actually, the populists and BJ Sr. would have been campaigning not for fiat money, but rather for a return to the bimetal standard that prevailed until western silver discoveries (Comstock Lode, etc..) made silver cheaper and caused inflation.

    Along with the 1864 act that devalued state bank notes by 10%, it really hurt those who had taken on silver-valued debt and had to pay it back in higher-valued gold.

    I'm with you on real money and the need to reduce inflation targets and all that. I'm just not quite sure that BJ comes out as badly as you initially suggested.


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