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By Pete Moore On February 27th, 2012

Bernanke’s money printing is affecting more and more parts of the economy. Reports the LA Times:

For the third time this year, several of the nation’s major airlines raised airfares last week, with United and Continental airlines initiating a $4 to $10 increase in round-trip ticket prices.

Virgin America, Delta Air Lines, US Airways and American Airlines have matched the increase, but JetBlue Airways and the nation’s largest domestic passenger carrier, Southwest Airlines, have yet to follow […]

Also, the average hotel room rate in North America climbed 7% in January.


  1. Bernanke has little to nothing to do with this.

    The biggest cost for airlines is fuel. There is a runup on the price of fuel caused by the Iran crisis and by huge speculation in the markets.

    Watch any financial tv show or read the WSJ or Financial Times on this subject.

  2. Actually, just read the article, the increased pirce of oil is in the headline.

  3. Why is fuel price going up? Here’s Eight reasons.

    ” Money printing ” is not one of them.

  4. Phantom –

    The Iran business is already priced in. Markets work like that. Your foxbusiness link contains this gem of a reason for increasing oil costs:

    “An improved U.S. economy means higher oil prices. U.S. GDP, employment and even housing have all staged unexpected improvements in recent months.”

    These were “unexpected improvements” to anyone not reading ATW for much of the last year. They were unexpected improvements to anyone who doesn’t understand how the money supply distorts an economy and manipulates inflationary booms for those first in line to get the cash.

    Yes, speculators are in the market. They’re taking Bernanke’s newly-printed greenbacks and bidding up prices.

  5. The longer this situation goes on, the more it will be priced in. Markets are indeed like that.

    The money supply jazz is a factor but it is only one factor. There will often be other, and more important factors. Like that supply and demand thing that Adam Smith wrote about.

    In the case of hotels- one reason why prices are up in my city ( at peak times ) is because we get more foreign and domestic tourists than ever before, despite the bad economy. In 2010, they spent $31.5 billion here, which is pretty good stuff.

    Total Visitors to NYC 2000-2010* Visitors (international and domestic) to New York City in 2010:
    48.8 million
    Visitors (international and domestic) to New York City in 2009:
    45.6 million
    Visitors (international and domestic) to New York City in 2008:
    47.0 million
    Visitors (international and domestic) to New York City in 2007:
    46.0 million
    Visitors (international and domestic) to New York City in 2006:
    43.8 million
    Visitors (international and domestic) to New York City in 2005:
    42.7 million
    Visitors (international and domestic) to New York City in 2004:
    39.9 million
    Visitors (international and domestic) to New York City in 2003:
    37.8 million
    Visitors (international and domestic) to New York City in 2002:
    35.3 million
    Visitors (international and domestic) to New York City in 2001:
    35.2 million
    Visitors (international and domestic) to New York City in 2000:
    36.2 million

    Source here

  6. Phantom –

    The money supply jazz certainly is a factor. This crystal clear graph shows just how insane the Federal Reserve has been in the last three decades and continues to be today. It’s now almost going vertical.

    Let me explain a little something about supply, demand and the money supply. Let’s take just one commodity, say oil. If the supply of oil remains fairly steady while demand increases then yes, prices will tend to rise in response. But what about money supply? If there is no new money coming into the economy while oil prices rise, then buyers must allocate more money to oil and away from other goods and services.

    In such a case we would see upward pressure on oil prices balanced out by downward pressure in on prices other sectors as capital is allocated away from those sectors and into increasing oil prices.

    Yet we don’t see such downward pressure elsewhere. Oil, food, commodities, land, stock markets, they’re all going up. You can only have general upward pressure on prices, in many economic sectors, when the money supply is great enough to allow prices to be bid up in aross the board without capital having to be allocated away from elsehwere. This is the situation we have today.

  7. Average hotel room up 7%?

    Still a great deal then since that’s about seven percent higher than seven years ago.

    Dig. Question.

    Don’t mangle the truth to fit preconceived prejudice. Listen to Charlie Munger. Attack your own ideas and then see if they’re valid.

  8. Graph.

  9. At this rate I may have to cancel my sea cruise to Wyoming.

  10. You should still go. You could visit Dick Cheney’s house.

  11. Mordor is in Wyoming?

  12. It’s scandalous. The USA and many EU countries such as ours are mired in debt, and the governments are deliberately increasing the money supply by vast amounts, at the expense of savers, in an attempt to inflate that debt away.
    This modern, worldwide experiment in using worthless paper as money is going to end at some point, and it’s going to end very badly.

  13. In the USA, savings account interest is indeed very low.

    But savings accounts are not the only asset that people have. Very many people ” save ” with their investments in stocks, including those who have paid dividends that are more than you can get in the bank. Putting all your savings in the bank is not the way to go, and never was.

    Inflation simply isn’t the problem. Inflation is well under control and is within the norms of recent decades.

  14. I say that inflation is, by definition, a problem. Up until recent times (ie, when politicians started lying about it), inflation was actually DEFINED as “an increase in the money supply” – because that is what it is.

  15. Pete Moore is correct – if an increased money supply is not the root problem, thewn we ought to see some things becoming more expensive while some other things become less expensive, due to the reallocation of capital. But that’s not the case; we’re seeing retail and wholesale prices increase across the board. No commodity is obviously decreasing in price – except the value of currency (ie, all other commodities are increasing in price, as measured in dollars). That can only mean one thing – it’s not that everything else is increasing in price, it’s that the dollar is decreasing in price. Why? Simple – because the supply of dollars is increasing.

  16. we’re seeing retail and wholesale prices increase across the board

    No you are not, not significantly.

    Houses cost less than they did ( which is a bigger problem than any inflation we now have ) Land outside of agricultural areas often costs less.

    In the US, natural gas wholesale prices have gone down over 70%.

    Cotton prices are way down from two years ago ( Pete said that the spike two years ago had something to do with the money supply. It did not )

    The average person in this country has never thought inflation was a function of the money supply. The term refers to purchasing power. Money supply conversations are important, but they are a kind of inside baseball for economists and wannabee economists. The average guy wants to know how much he has to pay at Tesco or Safeway. That’s the only inflation he cares about.

  17. I just tried to book an international flight with Continental/United on-line.

    YOW! What a disaster. They changed the booking format and now you have to book both ways SEPERATELY.

    The price shown is round trip (on the day) on each segment and ALL the flight dates are different prices.

    So if you want to book a round-trip (return) flight from “A” to “B” and back to “A” you have to look up the date you want to leave point “A”. The flight will be listed, but with the “round trip” fare on that DATE ONLY. So you have to divide by 2 to get the leg from “A” to “B”. Then you have to look up the date of return (“B” to “A”). You get the flight, but again with a “round-trip” fare so you have to divide by 2.

    Then you have to add the two half fares together to come up with the actual round-trip cost. (baggage extra)

    I finally got fed-up with the computer and called the 800 number. I spoke to a very nice woman who told me the “official” merger (actually the United take over of Continental) was taking place this coming weekend and the computers were a bit dodgy at the moment.

    She took my details and booked the flight…….Warning, booking by phone is $25 extra.

  18. Eddie

    That must have been a temporary glitch

    I just logged on and it worked normally when I pretended to book a R/T on different days

    If you go to the continental.com site ( not the united.com site ) it still works the way we are used to.

    It is one company, but they are still operating somewhat as different airlines until the full integration happens a little later on.

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