...How is it possible, in light of the massive and continuous "money printing" of QE, QE2, (QEnth), are CPI and other price indexes (unrelated to commodities, which is a separate beast altogether) deflating? As I have outlined on this blog on numerous occassions, QE is a simple asset swap between an asset with zero interest (cash) and an asset paying interest.
In this environment, where the CREDIT CHANNEL OF MONETARY CREATION REMAINS BROKEN, QE is actually DEFLATIONARY. The following CPI numbers bear this out. I have emphasized (the admittedly hard to read) relevant portion which indicates all item CPI to have DECREASED from 3.5 to 3.4 in the October/November time period. In addition, earnings statistics released today show that real income decreased as well. Where is the inflation?
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Nov. Oct.
Weight 2011 2011
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All items 100.0% 0.0% -0.1%
(3 decimals) 100.0%-0.019% -0.085%
6-mo annualize n/a 1.7% 2.1%
ex-food/energy 77.2% 0.2% 0.1%
(3 decimals) 77.2% 0.173% 0.136%
Y/Y
All items NSA 100.0% 3.4% 3.5% (3 decimals) 100.0% 3.394% 3.525%
ex-food/energy 77.2% 2.2% 2.1%
(3 decimals) 77.2% 2.153% 2.100%
All items SA 100.0% 3.4% 3.6%
(3 decimals) 100.0% 3.412% 3.559%
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