DENNINGER OBLITERATES BLOOMBERG'S BERNANKE PUFF PIECE

The numbers are proving Federal Reserve Chairman Ben S. Bernanke’s critics wrong.

More than a year after Republicans from House Speaker John Boehner of Ohio to presidential candidate Ron Paul of Texas warned that the Fed’s second round of asset purchases risked a sharp acceleration in prices, the surge has failed to materialize. The personal-consumption-expenditures price index rose 2.4 percent for the 12 months ending in December, near the central bank’s 2 percent target.

Near? And second, what part of this target is difficult to understand?

The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy’s long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.

Notice the repeated use of the words “long run”?

Why is this important? Because you live in the “long run.” Your life is, typically, about 85 years. So what is the difference in lifetime price inflation between 2 and 2.4%?

438% .vs. 651%, or close to 50% more lifetime inflation.

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