by Keith Weiner
The popular belief is that gold is a good hedge against inflation. Owning gold will protect you from rising prices. Is that true?
Most people define inflation as rising prices. Economists will quibble and say technically it’s the increase in the quantity of money, however Milton Friedman expressed the popular belief well. He said, “Inflation is always and everywhere a monetary phenomenon.”
First the AtlantaFed (with occasional shoulder-tapping exceptions) created a mini revolt in the way GDP was tracked on a day to day basis with its GDP Nowcast, one which pressured the NY Fed to create its own version (influenced by Goldman's own economic models as the Atlanta Fed's number are seen as too pessimistic), and now the same Atlanta Fed is casting serious doubt over the government's official inflation numbers, with its own "sticky-price" CPI tracker.
Having surged to its highest since 2008 in February, Core CPI's YoY gain inched back from 2.3% to 2.2% YoY in March hovering at post-crisis highs. The food index declined in March, as did the cost of 'shelter' and medical care but used cars and truck prices declined, as we noted previously.
Still above Fed "mandate" levels and near 8 year highs...
Via ConvergEx's Nicholas Colas,
While the world’s central banks struggle with deflation, millennials (those born between 1980 – 2000) are busy creating a world where persistently lower prices will be an economic cornerstone. “A feature, not a bug,” as they say in the tech world.