Quote of the Day: That's Not a Central Bank . . .

Wednesday, November 07, 2007 | 11:25 AM

The US Federal Reserve is the only central bank in the world that makes policy based on core inflation.

I find this beyond irresponsible -- it is indefensible.

I have decided to stop arguing with people about this. In the future, I plan on simply assuming they are suffering from blunt head trauma, and try to work up some empathy for their families, and move on to something they can actually understand and discuss intelligently . . .

Unlike the spendthrifts here in the US, other Central Bankers around the world understand what the true definition of inflation is.

Consider the following: The Reserve Bank of Australia hiked rates to an 11 year high (due to inflation concerns).

And, Miller Tabak's Peter Boockvaar points out that, over the past month, Iceland, Romania and Mexico have raised interest. While the RBA move was expected, the Australian $ rallied to a 23 1/2 yr high vs the US$.

All of this reminds me of that scene from Crocodile Dundee: That's not a Central Bank (pulls out 14 inch Bowie knife) Now THAT'S a Central bank!

Wednesday, November 07, 2007 | 11:25 AM | Permalink | Comments (44) | TrackBack (0)
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Fleckenstein made this comment

"It’s obvious that using an applause meter to run the central bank is a terrible idea."

I think he has it right......

Posted by: jmf | Nov 7, 2007 11:34:03 AM

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