And new evidence of increases in consumer prices comes from Junior Mogambo Ranger (JMR) Chuck from Billings, who reports that the inflationary rise in the price of breakfast cereals is being disguised by re-sizing the boxes down to a smaller size, with the sneaky result that you pay the same amount of money for a box of cereal, but get less cereal, which is the alternative to making you pay more money to get the same amount of cereal.

JMR Chuck figures that this new packaging strategy "will result in approximately a 13% decrease in the amount of product in each box, in order to avoid a price increase (!). Can it just be coincidence that this is also the approximate increase in the money supply? And that it reflects the actual rate of price inflation? Um, no, stupid question, food price increases are not reflected in the CPI, so there is nothing to worry about. We are all FREAKING DOOMED TO EAT SMALLER BOWLS OF CEREAL!"

As an aside, The Economist magazine reports that (in England, anyway) "cocaine is cheaper now than it was a decade ago." A decade! Maybe the new way that the government/Fed calculates its hedonically-jiggered inflation statistics, "proving" that inflation is always going down or is even "benign", is actually correct in some things!

The lesson of this? When you can't afford food because of the rising cost of food, you can use the Fed's new "substitution effect", which is to substitute cocaine (which went down in price) for food (which went up in price) in your market basket, and thus inflation is reduced to less than zero for you! Hahaha! Who knew? Drugs as an anti-inflationary device! And probably lose a lot of weight, too!

Or maybe the government/Fed will just disguise the inflation in breakfast cereals by pricing breakfast cereals as "dollars per box" and not "cents per ounce"! Therefore, since the price per box did not go up because there is less cereal in each box, inflation in cereals would be zero!

And with the "substitution effect" in play, we can then assume that the Fed will say that all consumers would try to escape higher prices in other foodstuffs by switching to breakfast cereals (which still cost the same in "dollars per box"), which in turn would be substituted by cocaine (which went down in price), driving overall inflation in food to less than zero! Hahaha!

And the breakfast cereal company itself would have to be pretty stupid not to at least mention how they are selling more boxes of cereal (although neglecting to mention that they are actually selling less actual cereal since each box has less cereal in it), hopefully driving the stock, and the stock options of the executives, up! And taking the whole stock market up with it!

This inflation thing, not to mention the lying about it, makes me so crazy with anger that I was going to the window to throw open the sash and begin to again verbally assail my stupid neighbors for being such economic dimwits, and how they are going to pay dearly for their economic and financial follies, and for their political folly of consistently electing, "I Love Big Government Programs" morons and moronettes to the federal government (except Ron Paul), who immediately turned the government into a giant giveaway machine, and how that is EXACTLY what the Founding Fathers were trying to prevent when they took steps to make sure that the government did NOT have the power to create the money to spend and expand, and they did this by requiring that money be only of silver (and gold) for the sole reason that the government cannot just print the damned stuff.

And to tell the truth, I like screaming at them because I love the looks on their stupid faces when I tell them how long and loud I am going to laugh at them, my voice dripping with contempt, and how much I will enjoy watching them suffer from the precipitous decline in their living standards that they will be forced to endure.

Well, I was halted in mid-stride towards the window when my thunder was suddenly available, with no work, from Bob Wood of Kaizen Managed Assets, who quotes Jens Parsson from his book, Dying of Money. He writes, "Everyone loves an early inflation. The effects at the beginning of inflation are all good. There is steeper money expansion, rising government spending, increased government budget deficits, booming stock markets, and spectacular general prosperity, all in the midst of temporarily stable prices.

"This is the early part of the cycle. In the later inflation, on the other hand, the effects are all bad. The government may steadily increase the money inflation in order to stave off the latter effects, but the latter effects patiently wait. In terminal inflation, there is faltering prosperity, tightness of money, falling stock markets, rising taxes, still larger government deficits, and still roaring money expansion, now accompanied by soaring prices and ineffectiveness of traditional remedies."

The tragic summary is that in the beginning of a monetary inflation, "Everyone benefits and no one pays." Unfortunately, at the end, "Everyone pays and no one benefits. This is the full cycle of every inflation."

I bring this up not because I love bringing this up (although I do, and in fact I perseverate about inflation in some bizarre, mentally ill, one-track-mind focus all the time because it scares the living hell out of me), but because Total Fed Credit did NOT go up last week! In fact, it went down by another $3.7 billion! Yow! You can't have inflation without creating the money to make it happen!

In fact, TFC has actually been relatively constant at around $855 billion for the last nine months or so, the longest stretch of "stable" TFC in Fed history since 1997! (Before that, TFC didn't change all that much on an annual percentage basis).

I say that this is causing what is making the stock and housing markets go down; the lagged effect of the cessation of the constant, continual creation of excess money and credit needed to finance a bull market finally overwhelms mere momentum bullishness!