Inflation Targeting Unmasked – – -Today’s CPI Crushed The Case For ZIRP

Well, that was timely. The August CPI came in at -0.1% and is up a mere 0.2% over the past year. So Janet Yellen can now say, look ma, no inflation!
Once again, therefore, the Fed has an excuse to keep shoveling free money into the casino. If Stanley Fischer insists that more evidence is needed that consumer inflation is progressing toward its intended 2% destination, and Bill Dudley persuades Yellen & Co. that financial conditions have already ‘tightened’ by 25 basis points, as measured by Goldman’s spurious Financial Conditions Index (GSFCI), we will get the 81st month of ZIRP; and with it a short-lived relief rally, not the Wall Street hissy fit that is long overdue and eventually unavoidable.
Alas, we will also get a vivid demonstration that main street America is being put in harm’s way by the posse of cowards, dissemblers and academic fanatics who run the world’s most powerful central bank. The evidence is right below in the summary table from this morning’s BLS inflation report.

This post was published at David Stockmans Contra Corner on September 17, 2015.