there is something very fraudulent going on here and frankly overall with the Fed itself playing, but on country wide, I have had them going to bankruptcy for a long time, so my response is why is this implosion taking so long?

Agreed but I think there are two additional elements to consider

1. The appeal to nationalism. I think risks of conflict grow when governments allow an US vs THEM attitude to percolate. This is one of my fears with China, involved or not in the international economy, as its nationalistic fervor can be scary at times and can override good sense. Nationalism blinds.

2. Competition for resources: We are rapidly reaching the extent of "undiscovered" resources. In the future to get access means displacing someone else. China has rapidly been out securing "long term access" to resources (a bit like putting armies on Territories in RISK, before the game has even started). When we say need copper and find that we can't get it because China has bought the mines and the copper is not even available on the market, well who knows what will happen.

I like Kunstler's take. His comment this week is quite good.
http://www.kunstler.com/

One feature of the risk economy is the Federal Reserve's new willingness to absorb any sort of crap collateral in exchange for massive cheap loans to insolvent companies and institutions. The Fed has, in effect, made itself the world's largest financial shit-magnet. It has already taken in a few hundred billion in securities based on non-performing real estate loans, and has now opened the window to securities based on non-performing credit card debt, car loans, and other miscellaneous IOUs still drifting un-hedged in the banking ether.
It's a mark of our collective desperation to avoid the consequences of so much reckless behavior that no credible authorities have stepped up to denounce this racket

In the financial world the problem has been temporarily solved, but in the real world ... the Fed can not solve the problem and this will be the slow constriction we are only starting to witness with inflation, unemployment, slumping car sales, rising gas prices, and unsaleable houses.

The way out is a decline in standard of living that, because no one will accept it as an option, will have to slowly work its way through the system on its own.

What a great analogy! Buffet yesterday thinks the worse is over and we'll go through more of a shallow recession but I question that. The underlying financials have looked like a ticking time bomb for so long.

It typically only exceeds cpi late in an expansion and into a recession. By the end of a recession, it is typically significantly lower than cpi:

Not sure about Bruce McFadden's point about GDP deflator. I won't claim to know the answer, but if Stirling Newberry's assertion is correct, than the same thing -- home prices -- are counted differently for gdp than cpi. I don't know why that should be the case.

P.S. Thanks Bob Oak for fighting to keep the site up.

So if you found a happy medium between the CPI and PPI then you would still have a GDP deflator that is far higher than what is being used.

As for an accurate measure of inflation, then I would look at the MZM, which is higher yet. After all, rising prices are a symptom of inflation, not the actual thing.

.....keep it up. I am of the firm opinion that 'economics blogging' is gonna be a big growth sector in the 'sphere. For all the obvious reasons and because the political bloggers have pretty much gone nuts over ID politics....

Which tells us zip about what's coming next.

This is day 4 and I'm not happy. We may have to change webhosts because 4 days of a site down is just unacceptable.
@#*)@.

Good point re why the GDP shouldn't incorporate the CPI. If headline CPI is really accurate, then it ought to be used for GDP, for consistency's sake at least.

At some point (and it may be by the end of this year), food and energy inflation are going to reverse, and if the housing collapse is still going on, Tim Iacono's number is going to go negative (and perhaps so will the GDP deflator) and then it is going to get very interesting.