Monday, November 8, 2010


Please examine the following interview of Austan Goolsbee (White House Economic Council of Advisors Chair) and Erin Burnett.  First, it is important to give Erin some praise since she is really a flaming liberal and typically serves up softballs and never challenges folks (unless they are hating on the US Treasury like Michael Pento).  While I wouldn't go so far as to say that Erin challenges Goolsbee, she does ask the questions we simply see that Goolsbee cannot answer it a straightforward manner or even close to truthfully.

We are witnessing the completion of a full circle where lies have required more lies and those lies have created the need to lie more.  The key here is that the CPI measures a basket of goods that exclude food and energy!  Of course the CPI is measurement stick as the basis of government payment increases or decreases for programs like social security.  Clearly the government is incented to manipulate this data and throw out anything that is really going up like food and energy.

At :40 seconds in the interview Erin asks the question about regular folks hurting due to the Fed's influence on driving up asset bubbles in commodities.  Goolsbee is a very good liar in that his response is "I don't know if the CPI shows that.  CPI is the stuff that we use".  Now, I'm not sure if Goolsbee means that the CPI is the stuff we use for economic misrepresentation and distortion of facts or if he is suggesting that CPI is a measure of the real cost to live, but whichever it is, it is complete nonsense.

The point of the post here is that the FED is blowing speculative bubbles as they have primed the pump with liquidity and every investor (large or small) has had to make decisions to deal with the environment that they have created.  Many of those choices have been to exit the USA altogether like I've discussed regularly while others have bought grains, cotton, oil, sugar, coffee, and anything else that is somehow unrelated to the value of the US dollar.  Senior citizens and the poor are the victims of this all out war as they are relying on fixed income investments or the generous hand of the government to assist them in meeting their daily living requirements.  While the Administration states there is no inflation as measured by the CPI, we all know that gas is now $1.00 higher than it was last year, coffee, sugar, bread, and all food is going higher.  The poor are going to suffer more and feel the increase to a much greater degree.  As I think about this I am disgusted because the Administration and liberals always tell us how much they care about these people, yet they would rather lie and cover up the farce of the CPI than tell the truth.

The FED is driving this unsustainable top in commodities and they need to stop.  They have driven us all to more risky assets and have destroyed lower risk products that serve people in need of predictable cashflows.  QEII is not going to produce more jobs, it is going to produce more price increases in these commodities and it will ultimately lead to a collapse (just like in June / July of 2008).  We are seeing the Administration lie to cover another lie and it isn't going to stop till it ends badly for many.



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