Jim Rogers: Fed understates inflation (Sarah Palin Was Right Again)

Sarah Palin was attacked by a reporter for stating that there is inflation in spite of the denials of the Fed.  Palin ended up being correct (and so did we). Now Jim Rodgers weighs in.


(Reuters) – U.S. government inflation data is “a sham” and is causing the Federal Reserve to vastly understate price pressures in the economy, influential U.S. investor Jim Rogers said on Tuesday.

The U.S. central bank uses inflation data that relies too heavily on housing prices, Rogers told the Reuters 2011 Investment Outlook Summit, and he criticized the Fed’s $600 billion bond-buying program.

Rogers, who rose to prominence after co-founding the now defunct Quantum Fund with billionaire investor George Soros some four decades ago, said he was betting against U.S. Treasuries. “I expect interest rates in the U.S. to go much, much, much higher over the next few years,” he said.

The core personal consumption expenditure index, which removes food and energy costs, is the Fed’s favored measure of inflation and was flat in October for the second straight month.

“Everybody in this room knows prices are going up for everything,” Rogers told the Reuters Summit.

The Fed began its $600 billion bond buying program last month, its second round of quantitative easing [this means monetizing the debt – printing more dollars and lowering the value of all of the dollars you have – Editor], to boost a sluggish U.S. economy, citing excessively low inflation and high unemployment.

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