We have a strange economy. The stock market, we are informed, boasts its longest winning streak since 1955. Gas prices, a commodity that virtually everyone relies upon, are poised to hit an all-time high. Is the economy roaring? Sputtering? The answer may depend on whether you're asking someone with a long commute or a large stock portfolio. My advice? Take the bus and buy.

Its crashing, no matter who you are. What we are currently seeing is a false bubble created by inflation and artificially lowered interest rates (thanks Fed!) which stimulate malinvestment:

http://www.financialsense.com/fsu/editorials/2007/0416.html

That article more or less debunks the idea that the dow is skyrocketing. Only when measured in inflating dollars.

Love the heading Dan, it reminds me of Deleuze and Guattari's Anti-Oedipus, Capitalism and Schizophrenia.

Our current economic woes have nothing to do with capitalism and everything to do with the Federal Reserve.

#1 - The Fed doesn't use the CPI as its primary indicator for inflation so editorial is flawed anyway as the Fed doesnt even use the indicator that is discussed. The Fed uses the CPE (Implicit Price Deflator for Personal Consumption Expenditures) as their main inflation index.

#2 - I believe that ben-T wants the Fed to pursue a policy of 0% inflation. One that will minimize economic growth due to such high interest rates, not allow companies to freely change their prices based on supply and demand, and have interest rates so high that lending will be limited so much that companies will be unable to get their hands on the capital that they need.

Bad plan. The 2% "target" that the Fed currently uses is perfectly healthy and does not dramatically erode our purchasing power.

No, you have heavily misunderstood. I support abolishing the fed and instituting a system of free banking, or at the very least a return to the 100% gold dollar (though this has problems of its own).

Your first point, the idea that inflation somehow "creates growth" is severely flawed. Inflation creates a growth in malinvestments, which is undesirable. This illusory growth is not actually an efficient use of resources, and will inevitibally lead to boom-bust economics. Like all price controls, the fed's 2% "target rate" does not allow markets to clear and is therefore undesirable. Specifically, it leads to recessions/depressions because it leads entrepreneurs to believe that the time preference of loaners are different than they are, and as such make investments which require longer time than is optimal to create returns.

I am not sure what you are talking about with regards to the CPI, because the article does not use it. It is comparing the Dow Jones Industrial measured in dollars to the Dow measured in real assets, using this to illustrate that it is in fact, crashing.