Posted by JM Ashby
In the same way that oil is traded on an open world market, even if it comes from the shores of Louisiana or your backyard, so are other commodities such as fruit, rice, and grains. When commodity markets are artificially inflated by speculators, the price of what you pay for things, whether it's gas at the pump or whole-grain bread in the grocery store, goes up.
New York Fed President Willian Dudley, while speaking to a group of working-class people, attempted to quell fears and deemphasize such inflation by selling the audience a brand new iPad.
After being bombarded with questions about food inflation, Dudley attempted to reassure his audience by putting rising commodity prices into a broader economic context -- but that only made matters worse.
"When was the last time, sir, that you went grocery shopping?" one audience member asked.
Dudley tried to explain how the Fed sees things: Yes, food and energy prices may be rising, but at the same time, other prices are declining.
He then stretched for a real world example. The only problem was he chose the Apple's latest tablet computer that hit stores on Friday, which may be more popular at the New York Fed's headquarters near Wall Street than it is on the gritty streets of Queens.
"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."
This prompted guffaws and widespread murmuring from the audience, with one audience member calling the comment "tone deaf."
"I can't eat an iPad," another said.
Again, this is the president of the New York Federal Reserve downplaying the significance of rising commodity prices by celebrating the price-point of Apple's next quarterly hardware offering.
I realize he was trying to say something positive, but the comparison he drew up in his mind really puts things in perspective. There is a fundamental disconnect between the nation's financiers and everyday people who are just trying to feed their family.