Over at Bloomberg Mark Waterhouse wonders, as I have, where the inflation that the Federal Reserve governors see might be hiding:
When Federal Reserve officials meet this week to discuss how much more stimulus the U.S. economy needs, they will have to parse various arguments about the threat of inflation. Those who want the Fed to raise interest rates, for example, sometimes assert that whatever the headline numbers show, price increases are already hitting some people hard.
The data don’t present much reason for concern.
The balance of the post concentrates on where prices have, indeed, risen and it’s the usual suspects: healthcare and education. His bottom line is that inflation isn’t biting much if at all.
There’s one group that inflation is in fact hitting: the rich. For example, the Forbes Index for Living Extremely Well increased more than 5% last year. The cost of investment, something that isn’t included in the CPI, has gone up as well. Meanwhile, the incomes of the rich went up by double digits.
If the Fed decides to raise interest rates, my tentative conclusion is that the Fed governors are hanging out with wrong people and that their wages are too high. I’d suggest a 50% cut as a start. And put serious controls over lunches, dinners, travel, and other gratuities they’re able to accept.