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demiller1: I feel that there is a cause for concern with inflation as it has this spiralling effect that gets out of control.
As a feedback loop? If you stoke the fire the cinders rise however if you feed the fire it burns! Is
not the increase in energy prices not a sufficient indicator of excess prices at this stage?
The biggest secondary factors that have the Fed's worried would be the current situation with the
Dow and NASDAQ. I feel that Greenspan wants a soft landing however the way the zigzagging
markets are continuing I feel that we are watching history in the making! Controlling the value in
USD is significant in the meantime so that bond rates will support offshore capital.

Hoopers: Thank you Demiller for the fed primer. I know some of the basics, but I tend to forget the specifics.
And thanks to the other poster who suggested inflation is like a feedback loop. Feeds on itself. Never thought of it like that before.
I have a couple thoughts. First, regarding oil. Of coarse, oil is more expensive these days. Is that because demand is growing very fast, exceeding supply, or is it because OPEC can set prices, regardless of demand. I tend to believe the latter.
Second thought....let me phrase my CPI question better. I was referring to the core CPI, and I wonder about the following scenerio...what happens if the fed continues to raise interest rates, but the core CPI stays in the 0.0 to 0.2 range? At some point, if the CPI remains flat long enough, can't one conclude no inflation? Or am I over simplying the whole matter.
Thanks, Hoopers


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