"There are lots of different measures of inflation. I would argue that commodities, per se, steel, copper, aluminum, hides, whatever, used to be a very good indicator of overall inflation in the economy when we were heavily industrialized. Now they represent a very small part of the economy and services are far more relevant to the purchasing power of the currency than at any time, so that broader measures of price, in my judgment, are more relevant to determining what the true rate of inflation is." greenspan 1997
Yeah- Its a good thing we got over that whole "eating" thing that's been bogging us down. If we were still stock with "eating" every day, we would really be affected by wheat and corn prices doubling in the last year.
the federal reserve cannot control cycles of commodities where there is underinvestment in production for long periods. you would have these cycles and price increases even on a gold standard. with that said your missing the point, its not that food is not important but its only part of issue
btw, since insurance companies lost their asses in the tech bust and 9/11..... they soaked the consumer by jacking up premiums to offset it... another hidden inflation tax everyone forgets about
Come on people, he has a point. Even when you buy food, you are not buying the raw commodity. What's the last time you went to the store to buy a bushel of wheat? All of it has processing & technology components. Those go down in cost as time goes on, while the raw commodity component goes up. Obviously the raw commodity cost have been outpacing the cost reductions in technology & processing.
Greenspan is full of it....if the Fed. cant control it with monetary policy....the Fed just ignores it...and leaves the inflation out of the calculation....... ex food and ex energy blah blah...it's almost an embarrassment and an insult