New York Fed President William Dudley got p0wnd by the crowd in Queens when he went down to explain the economy to the rubes. Too bad the “rubes” weren’t falling for it.
The former Goldman Sachs chief economist gave a speech explaining the economy’s progress and the Fed’s successes, but come question time the main thing the crowd wanted to know was why they’re paying so much more for food and gas. Keep in mind the Fed doesn’t think food and gas prices matter to its policy calculations because they aren’t part of “core” inflation.
So Mr. Dudley tried to explain that other prices are falling. “Today you can buy an iPad 2 that costs the same as an iPad 1 that is twice as powerful,” he said. “You have to look at the prices of all things.”
Reuters reports that this “prompted guffaws and widespread murmuring from the audience,” with someone quipping, “I can’t eat an iPad.” Another attendee asked, “When was the last time, sir, that you went grocery shopping?”
And that explains one of the key failings of the Fed. The two necessities in life, food and energy, are experiencing tremendous inflation. But the Fed’s inflation model ignores those things.
How stupid do you have to be to think people don’t need to eat or drive?