commodities prices have been rising rapidly across the board. according to federal reserve chairman alan greenspan the reason why this is not inflation is that most of the cost of end goods (as measured in the CPI) is due to wages and wage pressures have been kept under control due to productivity gains. in other words companies have been firing people and shedding jobs and making 'productivity' gains and the labor market has not rebounded at all (we're still not generating jobs at a rate sufficient to keep up with the rate that we're generating people). since there's enough unemployed people, salaries aren't going up. this is all supposed to be 'good' and a sign of a 'healthy' economy that is free of inflation according to greenspan. the possibility that rises in commodities prices could lead to shrinking consumer spending and weakness in the economy seems to have thoroughly escaped the grasp of chairman greenspan and our illustrious leader.
true to form, today's jobs numbers were weak, with previous numbers being revised downwards to make the punishment worse. the dollar dropped 1.8 cents against the euro today. we can expect more commodities inflation just from the weakness in the dollar (which has dropped $0.10 in 2 months). the good news is that the bond market strengthened and interest rates dropped, so americans can go even more into debt. what i don't see any evidence of it occuring is a reduction in the trade deficit induced by the falling dollar. how low is it going to have to go, and are foreign investors in the bond market going to get fed up with seeing their dollar-denominated investments shrinking to nothing before it gets there?
welcome to the faith-based economy...
p.s. i bought a suunto vyper from them for about $304.95 a year ago, and now its up to $334.95...