Karl Denninger examines the PPI and concludes there’s no inflation, though manufacturers are trying to increase prices. 
Caution: Consumer Products Crash Ahead
Courtesy of Karl Denninger at Market Ticker
You have to love the media this morning; the PPI was released to great fanfare with the claim that it showed….. inflation.
Oh really?
Here’s the deal "by the numbers":
- Total PPI up 0.8% in January.
- Foods down 0.4%.
- Energy up 3.7% (primarily gasoline, which has been going up)
- Ex-food and energy, 0.4%
Sounds like inflation ("break that deflation"), right?
Uh, not quite.
Crude goods were down 2.7% on the month and intermediate goods were down 0.7%.
What are crude goods? Things like iron ore.
Intermediate goods are "half-finished" things – for example, rolled steel.
Of course finished goods are things like cars, toasters, etc.
So what does this report mean?
Simple: Manufacturers are attempting to increase prices into ramping unemployment in a desperate attempt to maintain their operating margins.
It won’t work. Trying to increase prices into ramping unemployment leads to a collapse in demand and ultimately business failure.
But for the mouthbreathing "mainstream media", including, unfortunately people like Matt Drudge who ran this on his front page,
it’s all good……
To the point I raised this morning: If this is what passes for "reporting" in today’s media, we’re truly hosed.
Buckle up.
