The folks who missed the Economic Long Wave inflation peak of the mid 1970's were still insisting we hadn't seen a contraction yet, the last I bothered to look. But the curve of Consumer inflation as measured by the PCE shows the classic shape of 25 year increases and decreases in inflation.
With all the talk this week of Greenspan's legacy and Bernanke's prospects, it is well to remember that FED heads do not produce the economic cycle. In fact they follow it as fast as they can, sometimes making its swings more violent.
I am posting this chart from Paul Kasriel, and the classic long economic schematic chart below, several hours before the Consumer Price Index comes out. My view is that hang-wringing, wishing, and fiddling do not make a lot of difference in the long run. For investing and living , a grasp of the long cycle is superior to reading the tea leaves of daily economic releases. The longer tem fact is that consumer prices, and much else, peaked in the 1970's and bottomed in the late 1990's. That's when gold and crude oil bottomed in price as well
Click on charts for larger versions.
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