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True that we don't know

Submitted by Philip Brewer on February 24, 2008 - 15:45.

It's true that we don't know yet if we're in a recession. Possibly we're not.  I'm not alone in worrying that we are.

Oil is definitely not driving us into an inflationary tizzy. (See above where inflation is caused by excessive growth in the money supply.) Rising oil prices do, though, lower our standard of living. Also, since rising oil prices tend to drive up many other prices (by raising costs), it becomes very hard to know whether what we're seeing is inflation (money becoming less valuable) or a declining standard of living (due to resource depletion). It's made even more complicated by the fact that rising oil prices actually drive some other prices down (because the people who used to buy those things can't afford them any more, because they're spending so much more money on fuel).

All told, the Fed has a tough job.

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