Zero Hedge: Federal Reserve Admits Truth In Internal Memo
By Ilene
It used to be that nearly everyone except the Fed knew that prices were increasing. Now even the Fed knows that food prices are soaring. But it will stubornly stick to its flawed measures and tell the financial news that "lowflation" is not a problem. Meanwhile, in a blatant act of hypocrisy, the Chicago Fed raises cafeteria food prices to keep up with inflation. Oh, and they've been giving themselves raises.
This suggests 1) inflation measures used by the Fed do not reflect real-life meaningful price information, 2) the Fed knows it, 3) there are powerful reasons to pretend there is no inflation in the areas that truly affect consumers (especially non-0.1% consumers), and 4) a majority of Fed officials refuse to see what's in front of them in order to support the political need to deny inflation–at the expense of most of the US population.
Admitting the true rate of inflation would trigger Cost of Living Adjustment (COLA) raises for government workers, pensioners and social security recipients. Private sector unionized labor and nonfederal government employees would likely demand raises too. Bond buyers would insist on higher coupon rates. (Say Hello to Inflation, Inflation is Dead)
Higher interest rates will push the government's cost of debt service dramatically higher. Paul Price of Market Shadows discusses the situation in Inflation Will Never Go Up Again.
As reported yesterday, meat prices are a particular hot spot for inflationary forces (USDA warns of sticker shock on U.S. beef as grilling season starts). And as the Fed admits in its internal memo, "Over the past five years, many of you may have experience product price increases in grocery stores. Prices continue to rise between 3% – 33%."
Surely, anyone on a budget has noticed.
Federal Reserve Admits Truth In Internal Memo: "Prices Continue To Rise Between 3% And 33%"
Courtesy of ZeroHedge. View original post here.
We are confused: on one hand the Fed is injecting hundreds of billions of liquidity into the market, boosting the S&P to all time highs and making the rich richer (Piketty taking Excel lessons from Rogoff notwithstanding) while the economy remains stagnant because, according to the BLS, inflation is too low, and as everyone knows the biggest lament of the impoverished middle class is that "the value of my dollar isn't being destroyed fast enough for me to feel confident about the future."
On the other hand, the very same Federal Reserve Bank (of Chicago), just announced that as a result of "prices continuing to increase between 3% and 33%" (!), beginning May 27 it is hiking the prices in its cafeteria. So, clearly prices are rising at a 33% clip due to, how does the IMF put it, lowflation, right? Oh, and harsh weather.
From the Chicago Fed, highlights ours
Subject: Reserve Center Cafe changes coming
Reserve CenterTM Tenants,
Due to rising product prices in the past several years, The Reserve Center will increase its prices in the cafeteria effective May 27.
Over the past five years, many of you may have experience product price increases in grocery stores. Prices continue to rise between 3% – 33%. For the past eight years, The Reserve Center has been absorbing these increases. The last overall price increase in The Reserve Center cafeteria took place in 2006, followed by a limited increase on sugar-based products in 2012.
For the upcoming price increase, a thorough review of café items was conducted and, while some prices will remain flat, others will increase to recognize these market increases. The price increase will help The Reserve Center cafeteria continue to maintain high standards and service levels by providing quality products.
Another change includes the introduction of new menu program changes to provide greater variety as we continue to refresh the cafeteria menu offerings. In the following months, we will be distributing a survey to obtain feedback on these new menu changes, as well as your food preferences so that we can continue to tailor menu offerings based on input we receive from our customers.
Lastly, we've reviewed feedback and in response The Reserve Center cafeteria will now close at 1:30 p.m. on Fridays. However, July 11 tahrough Aug. 29 we will close at 1 p.m. as the traffic is lighter due to vacations.
Thank you for your continued support of The Reserve Center cafeteria.
Federal Reserve Bank of Chicago
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The good news (for Fed employees): as we reported last year, the average annual increase in the salaries of Federal Reserve workers over the past year has been around 13%, so a price hike should be bearable.
Everyone else? As we showed in "Real Hourly Wages Decline For The First Time Since 2012" better luck next time.
