The Fed doesn't even have a post

In today's column, Caroline Baum at Bloomberg notes rising inflation and soaring money supply growth around the world (wondering about the connection between the two) and how this is all going to work out for the world's central bankers.

After noting the "two pillars" of European Central Bank policy - economic analysis and monetary analysis - where asset prices are at least noted, attention is turned to the Federal Reserve.

Across the pond, the Fed is in an unenviable position as well. It doesn't have two pillars; it doesn't even have a post. What it has is a dual mandate (maximum employment and price stability), an implicit inflation target of 1 percent to 2 percent on a price index for consumer purchases excluding food and energy, and some bad inflation news.

Friday the U.S. Labor Department reported that the CPI rose 4.3 percent in November from a year earlier and 2.3 percent excluding food and energy. In a tacit acknowledgment that energy prices have gone one way (up) for seven of the last eight years and food prices haven't fallen on an annual basis in at least 40, the Fed is now releasing quarterly forecasts for overall and core inflation.

If prices continue to rise, don't be surprised if the Federal Reserve begins monthly forecasts and then weekly forecasts. You'll know we're really in trouble when inflation forecasts are updated daily.