In this week's Off the Cuff podcast, Chris and Mish discuss:
- Fuzzy Fed Math
- Housing-cost methodology understates true inflation
- China's Gold Hunger
- Vacuuming up 50% of total world production
- Market Madness
- Any news – good, bad, or worse – drives stock prices higher
Hooray! The Dow (over 15,000) and the S&P (well over 1,600) are at record highs.
As the Fed cheers its success in creating a triple-whammy in asset bubbles (stocks, bonds & housing), it's also patting itself on the back for doing so while keeping inflation securely squelched. The latest CPI stats from the BLS peg the inflation rate at a paltry 1.47%
Not so fast, cautions Mish, who did a little corrective math to the dubious way the BLS calculates housing price inflation, which is the largest single driver of the CPI. Using his methodology, a more rational accounting of housing prices pushes CPI up to 3.33% – well over the Fed's own targeted threshold of 2.5%, at which it has said it will stop quantitative easing (otherwise known as QE, or money-printing).
It's clear to Chris and Mish – as well as anyone with two eyes – that the Fed has no Plan B for exiting its popular QE program. The markets are high on liquidity, and will go into instant withdrawal convulsions the millisecond the QE spigot starts lessening. There is no political will in DC for austerity, and certainly the greatest beneficiaries of all this free money and its associated inflated asset prices –
by cmartenson 
