Federal Reserve and Monetary Policy: Price Stability.

It is my opinion that price stability was not achieved by monetary policy, but by off-shoring. I think this is the reason why there is a difference of opinion at the Fed and within the economic universe about inflation. Price stability controlled by monetary policy means that the Fed can control inflation. Price stability controlled by off-shoring means that the Fed has limited control. They can only control US consumers.

Greenspan has made comments that inflation was “contained”. 5 key indicators point to this conclusion; Employment level (measly 2.6 million(?) and a lousy 110, 000 in March), wage increase (2.5% year over year(?), PCE deflater (~0.3%) and Capacity Utilization (79.4%) and the average participation in the food stamp program continue to climb (see: ). Of course, there is the missing $1 trillion dollars (see: Case of the Missing Trillion).

Has the Federal Reserve missed the obvious? Let's take a look at some of the past speeches.
Remarks by Governor Ben S. Bernanke At the Global Economic and Investment Outlook Conference, Carnegie Mellon University, Pittsburgh, PennsylvaniaNovember 6, 2003
The Jobless Recovery

Remarks by Vice Chairman Roger W. Ferguson, Jr. At The Exchequer Club of Washington Luncheon, Washington, D.C.July 21, 2004

A Retrospective on Business-Cycle Recoveries: Are "Jobless" Recoveries the New Norm?
Remarks by Governor Ben S. Bernanke At the Distinguished Speaker Series, Fuqua School of Business, Duke University, Durham, North Carolina March 30, 2004
Trade and Jobs

All of these speeches missed the redistribution of income and investments that Keynes put forth. See:
Federal Reserve and Monetary Policy: Greenspan's speech on Capital Hill was as I feared.

The redistribution effect can explain why incomes are flat, the slack in the labor market, the twin deficits and the continuing problems with GM and now Ford. GM and Ford are going through a lack of output in the US. This lack of output is going to spread into other sectors of the US economy. An example is South West, they are having problems with the high cost of fuel, despite the fact that they have low labor cost.