There is No Food Inflation; the BLS Made Sure of That

Frederick Sheehan is the author of Panderer to Power: The Untold Story of How Alan Greenspan Enriched Wall Street and Left a Legacy of Recession (McGraw-Hill, 2009) and "The Coming Collapse of the Municipal Bond Market"(Aucontrarian.com, 2009)

"Moreover, inflation has been declining and is currently quite low, with measures of underlying inflation running close to 1 percent....In this environment, the Federal Open Market Committee (FOMC) judged that additional monetary policy accommodation was needed to support the economic recovery and help ensure that inflation, over time, is at desired levels."

-Federal Reserve Chairman Ben S. Bernanke, Sixth European Central Bank, Central Banking Conference; Frankfurt, Germany; November 19, 2010

"CORE U.S. INFLATION SLOWEST ON RECORD: Core consumer prices in the U.S are at their lowest pace since records began, bolstering the case for the Federal Reserve to complete its planned $600 bn in asset purchases and extend the programme to buy more....Excluding volatile food and energy prices, the consumer price index rose by only 0.6% on a year ago...."

-Financial Times - headline and lead story on page one, November 19, 2010

"A key gauge of U.S. inflation has fallen to its lowest level since record keeping began in 1957, underscoring continued weakness in the economy and bolstering the Fed's case that it should continue its bond-buying program."

-Wall Street Journal, first sentence, top of page one, November 19, 2010

A BRIEF REVIEW: The Federal Reserve launched QE2 (a.k.a.: printing money) on November 3, 2010. Chairman Bernanke justified this laboratory experiment as a measure to prevent deflation. He wrote in the November 4, 2010, Washington Post: "Most measures of underlying inflation are running somewhat below 2 percent, or a bit lower than the rate most Fed policymakers see as being most consistent with healthy economic growth...." This "2 percent" hokum is an invention of Bernanke & Comrades, but the chairman pretends it is chiseled into the Federal Reserve charter. The contention is important since it is on this rock the Fed has built its justification for launching the $600 billion asset purchase, referred to in the Financial Times headline above.

The media, as represented by the newspapers above, not only accept the Consumer Price Index as released by the Bureau of Labor Statistics, but also: (1): accept the rationale that food and energy prices should not be included in the price index because of their excessive volatility, and, (2): notify readers that such low inflation "bolsters" the Fed's case to continue pumping up asset prices. Note that both papers link the happy inflation news to the $600 billion purchase with the word "bolster." This has the whiff of a press release delivered by the Fed to the media.

It went unnoticed how the Bureau of Labor Statistics (BLS) relieved the volatile food and energy prices of volatility. The BLS also relieved the CPI of "extreme values and/or sharp movements [of prices] which might distort the seasonal pattern [which] are estimated and [are] removed from the data." So out went milk, cheese, oil, and cars from the CPI, if they did not meet the BLS volatility criteria. (The excisions also include non-edibles and non-combustibles, including cards, trucks and textbooks.)

Below are some monthly lists of items removed from the monthly Consumer Price Index Summary calculation and the excuses for doing so. (The lists were cut-and-pasted from the BLS website at the time. It looks as though the BLS only posts tables (no words) from the monthly CPI releases prior to May 2007.) There is nothing particular to the months shown. The reader may note the lists stop in 2006. This is because the BLS stopped releasing the list of items after December, 2006; possibly because the deception was so clear as to show the entire CPI calculation is a fraud. This is suggested without much conviction since there weren't ten people outside of the BLS or Federal Reserve who knew it existed, possibly because critics of BLS methods had so many other fish to fry: hedonic adjustments, geometric averaging, substitution bias, owners' equivalent rent, and on and on it goes.

To keep this short, the BLS methodology is not discussed. It is described in "Intervention Analysis Seasonal Adjustment," a paper on the BLS website. The "procedure" referred to is the "X-12-ARIMA Seasonal Adjustment Method," which may or may not apply to a particular item since (quoting the BLS) "components change their seasonal adjustment status from seasonally adjusted to not seasonally adjusted, not seasonally adjusted data will be used in the aggregation of the dependent series for the last 5 years, but the seasonally adjusted indexes will be used before that period." Yeah, right.

This prescribed method of stupefying the public successfully deterred me from attempting to understand the changes to food and energy prices. And, as mentioned above, there are so many other distortions to the CPI that one is better off to assume the consumer price index is rising 5% to 10% a year and to adjust one's life (and investments) accordingly. John Williams, author of the Shadow Government Statistics website, calculates that if the BLS used the same methodologies for compiling the CPI today that it employed in 1990, the government's number would be 4.5%. If the BLS used the same methodologies as in 1980, the official CPI would be 8.5%.

Year-in and year-out, some items (e.g. motor fuels, new cars) are apparently a nuisance to stable prices, with the same stated rationale for not including them. How can the errant products forever be in need of adjustment (or banishment), since the selection is supposed to include temporary aberrant conditions? Of course, this whole procedure should not exist, if the CPI is a measure of the change in consumer prices. But that is not its purpose. Chairman Bernanke cannot stop reminding us that one of the Federal Reserve's "mandates" from Congress is "stable inflation." Thus, throw out prices that change. The wonder is after primping the inflation calculation he still has such difficulty keeping it stable.


June 2002 - BUREAU OF LABOR STATISTICS RELEASE: CONSUMER PRICE INDEX - A NOTE ON SEASONALLY ADJUSTED AND NONADJUSTED DATA

Extreme values and/or sharp movements which might distort the seasonal pattern are estimated and removed from the data prior to calculation of seasonal factors. Beginning with the calculation of seasonal factors for 1996, X-12-ARIMA software was used for Intervention Analysis Seasonal Adjustment. For the fuel oil, natural gas, motor fuels, and educational books and supplies indexes, this procedure was used to offset the effects that extreme price volatility would otherwise have had on the estimates ofseasonally adjusted data for those series. For the Nonalcoholic beverages index, the procedure was used to offset the effects of a large increase in coffee prices due to adverse weather. The procedure was usedto account for unusual butter fat supply reductions and decreases in milk supply affecting the Fats and oils series. For the Water and seweragemaintenance index, the procedure was used to account for a data collectionanomaly. It was used to offset an increase in summer demand in the Midwest and South for Electricity. For New vehicles, New cars, and New trucks, the procedure was used to offset the effects of a model changeover combined with financing incentives.

[My underlining. This preface introduced (until January 2007) each month's "Note on Seasonally Adjusted and Nonadjusted Data" in the BLS' Consumer Price Index. I left it out of the following examples.]

JUNE 2004 - BUREAU OF LABOR STATISTICS RELEASE: CONSUMER PRICE INDEX - A NOTE ON SEASONALLY ADJUSTED AND NONADJUSTED DATA

For the fuel oil, natural gas, motor fuels, and educational books and supplies indexes, this procedure was used to offset the effects that extreme price volatility would otherwise have had on the estimates of seasonally adjusted data for those series. For the Nonalcoholic beverages index, the procedure was used to offset the effects of labor and supply problems for coffee. The procedure was used to account for unusual butter fat supply reductions, decreases in milk supply, and large swings in soybean oil inventories affecting the Fats and oils series. For the Water and sewerage maintenance index, the procedure was used to account for a data collection anomaly and dry weather in California. For Dairy products, it mitigated the effects of significant changes in milk production levels and higher demand for cheese. For Electricity, it was used to offset an increase in demand due to warmer than expected weather, increased rates to conserve supplies, and declining natural gas inventories. For New vehicles, New cars, and New trucks, the procedure was used to offset the effects of a model changeover combined with financing incentives.

July 2005 - BUREAU OF LABOR STATISTICS RELEASE: CONSUMER PRICE INDEX - A NOTE ON SEASONALLY ADJUSTED AND NONADJUSTED DATA

For the Fuel oil, Utility (piped) gas, Motor fuels, and Educational books and supplies indexes, this procedure was used to offset the effects that extreme price volatility would otherwise have had on the estimates of seasonally adjusted data for those series. For the Nonalcoholic beverages index, the procedure was used to offset the effects of sharp rises in the price of coffee futures. The procedure was used to account for unusual butter fat supply reductions, changes in milk supply, and large swings in soybean oil inventories affecting the Fats and oils series. For Dairy products, it mitigated the effects of significant changes in milk, butter and cheese production levels. For Fresh vegetable series, the method was used to account for the effects of hurricane-related disruptions. For Electricity, it was used to offset an increase in demand due to warmer than expected weather, increased rates to conserve supplies, and declining natural gas inventories. For New vehicle series, the procedure was used to offset the effects of a model changeover combined with financing incentives.

December 2006 - BUREAU OF LABOR STATISTICS RELEASE: CONSUMER PRICE INDEX - A NOTE ON SEASONALLY ADJUSTED AND NONADJUSTED DATA

For the Fuel oil, Utility (piped) gas, Motor fuels, and Educational books and supplies indexes, this procedure was used to offset the effects that extreme price volatility would otherwise have had on the estimates of seasonally adjusted data for those series. For the Nonalcoholic beverages index, the procedure was used to offset the effects of sharp rises in the price of coffee futures. The procedure was used to account for unusual butter fat supply reductions, changes in milk supply, and large swings in soybean oil inventories affecting the Fats and oils series. For Dairy products, it mitigated the effects of significant changes in milk, butter and cheese production levels. For Fresh vegetable series, the method was used to account for the effects of hurricane- related disruptions. For Electricity, it was used to offset an increase in demand due to warmer than expected weather, increased rates to conserve supplies, and declining natural gas inventories. For New vehicle series, the procedure was used to offset the effects of a model changeover combined with financing incentives.

Bernanke Clips the People's Coin - From Bakersfield to Burma

Frederick Sheehan is the author of Panderer to Power: The Untold Story of How Alan Greenspan Enriched Wall Street and Left a Legacy of Recession (McGraw-Hill, 2009) and "The Coming Collapse of the Municipal Bond Market"(Aucontrarian.com, 2009)


"Ben Bernanke: The Chauncey Gardiner of Central Banking" examined the Federal Reserve's November 3, 2010, decision to save the economy by inflating the asset markets. Chairman Bernanke shared his unpardonable rationale for QE2 in the Washington Post, on November 4, 2010. His deadly cruise missiles, QE1 and QE2, were described in "Chauncey Gardiner."

The subject of CG2 - Chauncey Gardiner, Part 2 - is Bernanke's ignorance of the United States' unavoidable association with the rest of the world. The consequence of Federal Reserve money expansion is not only disrupting foreign economies; the backwash from dollars piling up overseas is raising food prices in the U.S.

In his Washington Post commentary, Bernanke never mentioned the dollar, the currency that is being aggressively depreciated by the Federal Reserve. In the Post, Bernanke resorted to "price stability," a deceptive phrase invented to justify inflating prices, in the present instance, by 2% a year. No Federal Reserve chairman before Bernanke claimed he needed to inflate prices to prevent them from deflating. Congress has not addressed this new coin-clipping mandate of the Fed, nor will it. Bernanke could declare tomorrow that a 5% annual currency debasement is necessary for price stability. This, too, would be met by silence. What is the point of paying the House of Representatives since it does not represent?

Depreciation of the dollar at home is handcuffed to depreciation of the dollar against other currencies. (This is a "competitive devaluation" in which most countries are participating, but the U.S. is the most assertive aggressor.) Even before the Fed's announcement of QE2 on November 3, denouncements from overseas warned Bernanke he was about to rouse a new round of anti-Americanism.

On October 13, 2010, the China Securities Journal (an affiliate of the Chinese government's official news agency Xinhua News) warned: "The U.S. expansionary monetary policy could hijack the global economy, and emerging markets are the most likely to suffer the consequences." After this and many other declarations from the Chinese, the Congressmen and Senators who demand China cooperate in currency adjustment said and did nothing about the Fed's QE2 operation. The politicians either want to launch a trade war (goading nationalism could help beleaguered office-holders) or are unable to rub two thoughts together at the same time.

Speaking of the untutored, the (London) Daily Telegraph targeted Bernanke on October 16 when it warned: "America's attempt to print itself out of trouble...is far from proven [and] could actually make things worse. QE on this scale now being proposed has never been tried. It is beyond the realms even of economic theory." (In the aftermath of QE2, Germany's Finance Minister Wolfgang Schaeuble seconded this opinion: "However you look at it, my impression is the U.S. is in a state of desperation.")

The broadsides did not stop: On October 23, 2010, German Economic Minister Rainer Bruederle addressed both the European Central Bank's balance sheet and the well advertised intention of the Federal Reserve to commence its attack on the world economy: "An excessive, permanent increase in money [supply] is, in my view, an indirect manipulation of the (foreign exchange) market." China Commerce Secretary Chen Deming warned on October 26: "Because the United States issuance of [dollars] is out of control and international commodity prices are continuing to rise, China is being attacked by imported inflation. The uncertainties of this are causing... problems."

The flow of Federal Reserve Notes overseas is indeed causing problems. Commodity prices are at all-time or generational highs when quoted in the most overabundant currency on the world, U.S. dollars: natural rubber, synthetic rubber, corn, soy, wheat, cotton, iron ore, steel, and cattle. It is always the case when prices become distorted that shortages develop. Today there are scarcities of palm oil, vegetable oil, soybeans, diesel fuel, engineers, welders, pipe fitters, electricians, and coal. Federal Reserve officials, operating as they do in a theoretical world, certainly did not consider before this latest act the food riots that spread across at least 20 countries in 2006 through 2008, as commodity prices (food, in particular) were doubling and tripling.

Chairman Bernanke is an ignorant man, evident whenever he speaks, but wondrously displayed in comments after his November 3 launch. Bloomberg news described a talk by Simple Ben in Jacksonville, Florida on November 5: "Federal Reserve Chairman Ben S. Bernanke said the central bank must focus on the U.S. rather than overseas economies when trying to spur the recovery by purchasing an additional $600 billion in Treasuries."

Ben is deaf to anger that has been directed against the U.S. since his latest dollar dump. The gathering trend towards rising trade barriers, capital controls and protectionism shifted into a higher gear after the Fed's announcement. This is not good for the United States. These tendencies did not work out well for the U.S. in the 1930s and that was a time when the world admired America. The insistence of his fellow, establishment economists to still call Bernanke "an expert on the Great Depression" shows this so-called profession is gurgling its death rattle.

After his Jacksonville address, Bernanke was asked how his duplicitous description of inflation (it is too low) could be true given "skyrocketing" commodities prices. The disoriented cosmonaut replied that rising commodity prices are "the one exception" to a broad reduction in inflationary pressure. He went on to say the "excess slack in the economy" will make it "difficult for producers to push through higher prices to consumers."

It will be difficult for producers to stay in business if they don't. Over the past year, the price of wheat has increased 74%; corn: 14%; oats: 68%; heating oil: 29%; gasoline: 25%; pork: 60%; coffee: 27%; beef: 18%; sugar: 44%; copper: 37%; and cotton: 66%.

Some companies have been unable to pass on costs. Kimberley Clark, Wendy's/Arby's Group, and CKE restaurants (among many others) announced third quarter 2010 profits fell even though total sales rose. Squeezing profits out of companies contracts the job market; it does not "spur" it. Some companies, including General Mills, McDonalds, and many supermarket chains have raised their prices, in defiance of Bernanke's contention that it will be "difficult for producers to push through higher prices to consumers."

It is the consumers who can least afford who suffer the most from rising commodity prices, especially since personal income in the U.S. continues to fall, as it did once again in September, 2010. According to the Bureau of Labor and Statistics, the 20% of Americans with the lowest wages spend nearly 60% of their after-tax income on food and energy. The highest 20% of earners spend about 10% of their after-tax income on these necessities.

Only a celebrity economist could think rising commodity prices will be "contained." (A reminder of Federal Reserve Chairman Ben Bernanke's consistent record of being wrong: "At this juncture . . . the impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained." - March 28th, 2007). UPS just announced it is increasing shipping rates by 4.9%. College tuitions for 2010-2011 rose 7.0% at 4-year public colleges. Holiday airfares in 2010 are expected to be 18% higher than a year ago (FareCompare.com).

Like coin-clippers of yesteryear, Bernanke denies any wrong doing. In the Post, he claimed inflation is so low it is "unhealthy." But this is one of the gravest crimes one can commit against the People. (Coin-clipping was the practice of clipping small amounts of gold or silver from each coin and then selling the shavings.) We have become so refined, the crime goes unmentioned. It was not always so.

In 1278, King Edward I raised the penalty for coin clipping to execution. There were 298 offenders who were hung for offenses against "our Lord the King's Coin." Under Queen Elizabeth I in 1576, "a goldsmith named Thomas Green was drawn from Newgate to Tyburn, and was there hanged, beheaded, and quartered for the clipping of gold and silver coins." On June 21, 1776, Phoebe Harris was burned at the stake, at Tyburn, for High Treason. The specific crime was coin clipping. A crowd of 20,000 gathered to watch. The odor from her body smoke left some spectators gasping.

The People - from Bakersfield to Burma - should settle for the disestablishment of the Federal Reserve and send Ben and his silly friends back to college campuses where they can teach students who are silly enough to believe their disgraceful professors whose empty-headed curriculum they will someday teach.

Ben Bernanke: The Chauncey Gardiner of Central Banking

Frederick Sheehan is the author of Panderer to Power: The Untold Story of How Alan Greenspan Enriched Wall Street and Left a Legacy of Recession (McGraw-Hill, 2009).

"[H]igher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes."

-Federal Reserve Chairman Ben S. Bernanke, Washington Post, November 4, 2010

In Ben Bernanke's Washington Post elucidation of Fed policy, "What the Fed Did and Why: Supporting the Recovery and Sustaining Price Stability," the Fed chairman cut-and-pasted misleading paragraphs from earlier misleading speeches. He did not discuss the two most important aspects of his money experiment. Bernanke did not address, first, the real economy or, second, the rest of the world. It will be the first of these lapses that will be discussed below.

On November 3, 2010, the Federal Open Market Committee's [FOMC] decided to buy $600 billion in bonds. The exchange works as follows: $600 billion of cash will be dispensed to the banking system by the Fed and $600 billion of U.S. Treasury bonds will be extracted. The Fed will also reinvest over $400 billion of maturing mortgage securities it bought earlier and buy Treasuries. The total purchases of over $1 trillion will satisfy, to some degree, the Federal Reserve's unstated but sine qua non obligation to fund the Treasury Department's deficit.

This package is known as QE2: quantitative easing, second round. The first round was initiated in March of 2009. On March 18, 2009, the Fed announced it would buy $750 billion of mortgage-backed bonds, $100 billion of Fannie Mae and Freddie Mac securities, and $300 billion of long-term Treasury securities.

To herald the New Era in central banking, Chairman Bernanke appeared on "60 Minutes." His March 15, 2009, TV appearance was introduced with fanfare: "You've never seen an interview with Ben Bernanke... By tradition, Federal Reserve Chairmen do not do interviews. That is, until now."

On the show, Chairman Bernanke forecast that "green shoots [will] appear in different markets."

INTERVIEWER: "Do you see green shoots?"

Chairman BERNANKE: "I do. I do see green shoots."

"Do you see green shoots?," became the question on CNBC that every guest was asked. Most saw green shoots, some were looking for them, and others thought the question was childish, and probably did not receive another invitation to this carnival.

Before embarking on QE2, one might suppose the FOMC studied the aftermath to QE1. In this regard, the central bankers were handed a treat. Bernanke's Domino Theory in the November 4, 2010, Washington Post is quoted above. The catalyst for recovery is "higher stock prices." The stock market has risen 75% since March 9, 2009. Bernanke could not have asked for a more boisterous number to plug into his equation.

The result? Incomes have fallen. Employment is hard to find. In the Washington Post, the Fed chairman justified QE2 (as he had QE1) by stating the Fed's mandate "to promote a high level of employment." The official and understated unemployment rate was 8.1% when Bernanke was interviewed in March 2009. The official rate has risen to 9.6%. The "U-6" level of unemployment has risen from 15.6% to 17.0% since March 2009. This number, calculated and released monthly by the Bureau of Labor Statistics, includes the unemployed plus those who are "discouraged" - people who have not looked for a job in the past four weeks because they think there are none - plus, those working part time because they cannot find a full-time job. The number of unemployed who have been without a job for 27 weeks or longer rose from 3.2 million in March 2009 to 6.2 million in October 2010.

Nevertheless, Bernanke's central-planning unit will fix higher stock prices: Please note, in his Domino Theory, "higher stock prices" are not conditional. Bernanke's assumption should not be taken unconditionally to the market, since Bernanke's plan will fail, but it may produce a Garden of Eden before we drown in a Valley of Tears. An example of Bernanke's checkered record in market rigging is the Fed's failure to boost the housing market. The Fed has bought over $1 trillion of mortgage securities. According to the National Association of Realtors, the average existing home sales price in March 2009 was $170,000. This rose to $183,000 in June 2010, but has now fallen to $172,000. This much can be said of the Fed's mortgage effort: without it, house prices would be much lower.

Another noteworthy feature of the Post article is Bernanke's narrow understanding of an economy. He described it as a "virtuous circle that will 'further support economic expansion.'" (Further expansion is false, but so was the entire article.) The virtuous circle will "lower mortgage rates" and "lower corporate bond rates" and prod "higher stock prices," according to Bernanke. This will "spur spending."

He did not mention that personal consumption did rise in September 2010 (by 0.1%). Alas, this was achieved the old-fashioned way: Americans spent more than they earned. The chairman shows no signs of understanding there are many paths by which "increased spending will lead to higher incomes" and that he is navigating the worst one. (For the lower 99.9% of the American people that is, not for the Federal Reserve chairman.)

That is the entire American economy according to the Fed chairman, the former college economist, who calls himself a macroeconomist. What "macro" means to the professor is uncertain, but the dictionary defines a macroeconomist as one who studies the economy "as a whole."

It is surprising the P.R. division at the Fed did not tell the horticultural expert he should at least mention "Main Street," or the "real economy," two terms used to distinguish the rest of America from Wall Street and Washington. (Wall Street and Washington being one in the same.) In the Post, Bernanke's only solution to economic doldrums is to manipulate asset prices. He has spent the past 18 months distorting stock, bond, commodity, and currency markets. This is from a man who never spent a day off a university campus until he went to Washington. (From the "60 Minutes" interview: "I've never been on Wall Street.")

Jobs and higher incomes are produced from profits. Bernanke never used the word "business" in his Post piece. He never mentioned "banks" or "banking" or "credit." Saving the banking system was (apparently) his crutch for pouring money into banks and regenerating their criminal culture. He is, after all, running the central bank, but his financial system, and his economy, has been reduced to stocks and bonds.

Nevertheless, taking the world as it is and not as Simple Ben would have it, business and bank loans are part of the economy and QE1 had little influence on either. In his one, glancing reference to the job-creating world, the Fed chairman asserted: "Lower corporate bond rates [courtesy of the Fed's manipulations - editor's note] will encourage investment."

Really? In its latest poll, the National Federation of Independent Business (NFIB), which represents small businesses, found that 52% of its members do not want a loan. That is a record high. Only 3% of NFIB members said getting a loan was a problem. Stephen Schwartzman, co-founder of Blackstone, the ubiquitous private-equity buyout firm, sees no point to QE2: "It's not an enormous incentive to do something different with your businesses because rates are down a few basis points. Money is already quite cheap." It is so cheap that Wall Street has leveraged itself to an estimated record $144 billion payout in 2010 bonuses, according to MSN News.

Again, taking the world as it is and not as it should be, we are stuck with Simple Ben. He has announced QE2, restating the same ambitions as when he launched QE1. Albert Einstein has been quoted by several critics in reference to QE2: "The definition of insanity is doing the same thing over and over again and expecting different results." Bernanke's inability to do anything other than what he has done before resembles a fictional character with a narrow view of the world.

Chauncey Gardiner (actually, Chance the gardener), was the mentally incapacitated gardener played by Peter Sellers in the screen version of Jerzy Kozinski's sagacious novel Being There. Chauncey, a man whose life was limited to gardening and watching TV, became, through a series of misapprehensions, the top adviser to officials in Washington, including the President:

President "Bobby": Mr. Gardener, do you agree with Ben, or do you think that we can stimulate growth through temporary incentives?
[Long pause]
Chance the Gardener: As long as the roots are not severed, all is well. And all will be well in the garden.
President "Bobby": In the garden.
Chance the Gardener: Yes. In the garden, growth has it seasons. First comes spring and summer, but then we have fall and winter. And then we get spring and summer again.
President "Bobby": Spring and summer.
Chance the Gardener: Yes.
President "Bobby": Then fall and winter.
Chance the Gardener: Yes.
Benjamin Rand: I think what our insightful young friend is saying is that we welcome the inevitable seasons of nature, but we're upset by the seasons of our economy.
Chance the Gardener: Yes! There will be growth in the spring!
Benjamin Rand: Hmm!
Chance the Gardener: Hmm!
President "Bobby": Hmm. Well, Mr. Gardiner, I must admit that is one of the most refreshing and optimistic statements I've heard in a very, very long time.
[Benjamin Rand applauds]
President "Bobby": I admire your good, solid sense. That's precisely what we lack on Capitol Hill.

President Bobby adopted Chance's optimistic advice in an address before the Financial Institute of America. His speech was the talk of the town. Television, even in that distant past (Being There was written in 1970), was on the spot, with its unfailing ability to trivialize any topic.

The host of "This Evening," a fictional, national TV news show with 40 million viewers, asked Chauncey Gardiner to appear after the Vice President cancelled.

Chauncey was asked for his opinion of the President's address, in which President Bobby "compared the economy of this country to a garden and indicated that after a period of decline a time of growth would naturally follow." Chauncey replied: "I do agree with the President: everything in it will grow strong in due course. And there is still plenty of room in it for new trees and new flowers of all kinds."

At the end of Chauncey's appearance, the host embraced him center stage. The audience's "applause mounted to uproar."

After his "green shoots" prophecy, Chairman Bernanke closed his "60 Minutes" performance. He offered Americans a sunlit future: "I think we will see recession coming to an end, probably this year [2009]. We'll see recovery beginning next year, and it will pick up steam, over time."

In the wake of this rousing prediction from the Chauncey Gardiner of Central Banking, Wall Street TV performers have talked the stock market up 75%. We are seeing new vistas of instability.