Part of the (absurd) rationale for excluding “volatile” food and energy prices from the core CPI is that these categories are affected by, gasp, speculators. Wise central bankers–who need an excuse to let inflation soar while extending their employment–therefore focus on price changes for those who don’t eat or drive.
But now comes the latest Wall Street Journal survey to confirm that food and energy prices are out of control not because of “speculators” but because of an imbalance of supply and demand:
The surge in food and energy prices is being driven by fundamental market conditions, rather than an investment bubble, according to the majority of economists in the latest Wall Street Journal forecasting survey.
50-one per cent of the respondents said demand from China and India was the prime factor in soaring energy prices, and 40% said demand was the chief contributor to rising food costs. Constrained supply was cited second most-often; 20% blamed supply problems for higher food prices and 15% for increasing energy prices.
Please oh please grow a spine, Ben.
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