Continue reading Serious Money: Is gold an investment?

Serious Money: Is gold an investment? originally appeared on BloggingStocks on Fri, 11 Dec 2009 18:00:00 EST. Please see our terms for use of feeds.

Things are not working out so well for those at the Fed who deny that inflation exists. After all, its job is to keep the currency strong by putting out brush fires of inflationary expectations before they can become a firestorm of price spike fears. And if current consumers' expectations of inflation are any measure, the Fed is not doing its job.

That's according to the Associated Press, which reports that 90% of those it polled expect ballooning costs to squeeze them financially over the next half-year. Consumers have less money than they used to -- the median income is down since 2000 from $61,000 to $60,500. And prices have risen -- food has tripled in many cases and gasoline prices are up to around $4.20 a gallon. But the Fed does not see this -- it measures inflation excluding food and fuel -- and has kept rates at 2%.

And with housing in the tank and lenders in trouble, they can't borrow their way to balancing their budgets. Since the Fed is not controlling inflation, people are coping by cutting back. They are driving less, easing off the air conditioning and heating at home and cutting corners elsewhere. Half are curtailing vacation plans; nearly as many are considering buying cars that burn less gas.

Continue reading Ninety percent of consumers expect cost squeeze

Ninety percent of consumers expect cost squeeze originally appeared on BloggingStocks on Mon, 30 Jun 2008 11:56:00 EST. Please see our terms for use of feeds.

Despite Fed Chair Ben Bernanke's comments this week about inflation, the dollar is dropping -- which is fueling higher oil prices. And the reason for that relates to the different strategies of the Fed and European central banks for fighting inflation.

The difference? The Fed talks about inflation but keeps its interest rate at 2%. If Bernanke was serious about fighting inflation, he'd raise rates. Meanwhile, the New York Times reports that two European central banks -- which set their rates at 4% (European Central Bank (ECB)) and 5% (Bank of England) -- are talking about raising the rates further because they're "alarmed by soaring prices for food and fuel." The ECB thinks May inflation was 3.6% and it expects a 3.4% price rise for all of 2008.

The dollar has lost 70% of its value since January 2001 -- it's dropped from 92 cents to the Euro down to $1.56. Now if you're an investor, would you rather get a 4% return or a 2% one? That's the simple choice faced by people trying to decide whether to buy Euros or Dollars. And with the ECB on track to raise interest rates next month, the dollar is likely to fall further behind unless Bernanke puts the Fed Funds rate where his mouth is.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

Why the dollar is dropping originally appeared on BloggingStocks on Fri, 06 Jun 2008 09:48:00 EST. Please see our terms for use of feeds.

GE after the bell 9/14/06: selling off division doesn't affect stock price originally appeared on BloggingStocks on Thu, 14 Sep 2006 17:18:00 EST. Please see our terms for use of feeds.