Who Is Taxing Them?
In it, Drew Matus, senior economist at Lehman Brothers Holdings, makes roughly the same prediction as me and says
"The big issue is the fact that inflation is accelerating, and it's taxing consumer spending. The first half is not going to look all that good."
That's a good characterization of it. Consumers are being taxed by the higher inflation. The only thing missing is the issue of who is taxing them. The answer to that question is of course Ben Bernanke, Donald Kohn and the others at the Federal Reserve. It is their policies which have driven down the value of the dollar and driven up the price of oil and other commodities and so eroded the purchasing power of ordinary Americans. This also means that their inflationary policies wont have the intended "stimulative" effect after all.