Hand That Book to Alan Greenspan
Kids blow bubbles. They like bubble baths, bubble gum, and the gizmos that they wave to make more bubbles. Adults like bubbles too. They like speculative froth, irrational exuberance, the wealth effect, bull markets and disposable income. We enjoy condo flipping, although be warned that the pasttime involves inherent risk. Alan Greenspan is worried about inflation, core inflation, not the other kind, the kind that includes fuel and stuff. The nuclear family doesn’t have to worry about fuel, although the thermonuclear family does. The Fed has reached for the Farmers Almanac in order to divine the full depth and texture of bubbles yet to come.
According to the Almanac, this winter will be cold in some places, really cold in others, mild through the desert southwest, chilly in the Bay Area, breezy in Oklahoma, dire in Northern Michigan. Los Angeles will experience episodes of rain but many of those episodes have been cancelled. Portland Oregon can expect severe chills unless Birkenstocks are winterized at any Les Schwab outlet. Seattle squirrels have already made reservations for Maui; the cost of pine nuts is through the roof.
The result? The Fed paid almost thirty dollars for its copy of the Almanac believing wrongly that Michael Chabon had written an essay and that David Foster Wallace was the author who covered the weather in New England. Thirty dollars is inflationary, so interest rates must rise as the economy slows, and book sales will suffer. Remember though that it’s our civic duty to pay the heating bills. Read a book about the Enron scandal. That will keep you warm.