Grim News

While the fatuous Alan Greenspan works frantically to burnish his reputation (and preserve the impact of his Randian free-market obsession), the Journal observes that the world is now engulfed by rapidly igniting inflation.

Kimberly-Clark Corp., maker of household goods, began raising prices in February between 4% and 7% for some paper products, including Huggies diapers, Cottonelle bath tissue and Viva paper towels. Hershey Foods Corp. raised the selling price of its chocolate bars 13% in February after boosting prices between 4% and 5% in April 2007. Hanesbrands Inc., which owns the Champion and Hanes apparel lines, has warned that sustained high cotton prices could filter through to retail prices.

It is obvious to everyone, except perhaps Ben Bernanke, that US consumer price inflation is accelerating rapidly while wages are barely budging. Anyone who depends on the value of their savings for income (now or in the future) is being savaged twice: rising prices and falling yields.

I am hoping that my salary will rise by something close to the current CPI rate of 4.3% this year, but there are no guarantees. Our household has been cutting expenses as best we can, but the most hard-to-defer purchases (energy and food) have been the most affected by inflation.

It's hard to picture the inflation picture getting better in the short term. I think it will create a lot of resentment among workers toward (a) their employers, who aren't likely to raise wages fast enough to keep pace with inflation and (b) the government, whose nominal job is to protect the integrity of the currency.