“The market foreboding concerns a rerun of ‘That ‘70s Show’ of higher prices but mediocre growth.” – Wall Street Journal lead editorial, “That Stagflation Show”
It took awhile to find them as they were buried in the back of a closet and had to go through a period of fumigation to rid them of their mothballed stench. Today the leisure suits were ready to be worn by The Wall Street Journal’s editorial board.
Regular readers of this blog know Wall Street Weather made the correlation months ago that Federal Reserve Chairman Bernanke - despite his emphatic denials - have brought back reruns of “That ‘70s Show.” In that post as well as a more recent one, I made the case before the Journal did today that “Paul Volcker Can Save Us Again From That 70s Show.” In fact, going beyond the WSJ, I made the case in a post last week that Richmond FRB president Jeffrey Lacker would be better than Bernanke as Fed Chairman.
Not only has Bernanke and Co. denied they are ‘70s retreads, but they continue to put the blame on high commodity and energy prices on speculators. The Fed refuses to take responsibility for weakening the dollar that in turn causes crude to cost more. With Fed Funds below the rate of even the government’s acknowledged level of inflation, investors are going to seek higher yield by flocking to what’s hot. Since the WSJ does not follow planetary cycles, they are unable to provide their readers with additional insight into short and long term economic trends, as well as what motivates Bernanke and Co. to do what they do.
However, I must give the Journal credit for its chart within the editorial that shows crude oil’s rise as monetary policy eased. This is a cut the bs-out visual that the Fed and its economic and media apologists cannot deny.
Here are additional past WSW posts that directly relate to the WSJ editorial:
“The Fed’s Future” (9/18/07), “The Missing Element” (11/28/07), “The Fed Under Fire” (3/5/08), “Bernanke’s Bubble Lab” (5/16/08), “Fed Head Says Oil Prices Driven by Supply & Demand” (5/21/08), “The Fed Fails to See GM’s Reality” (6/3/08).