FED Chicago Pres, Evans speaks on inflation

Inflation in what part of the yield curve?

Mostly he is speaking about the consumer end, the short end. Mr. Evans will need to look at the long end, which is inflated relative to the short end, which we can see directly by the steepness.

The costs for stimulus projects are already being over run, up about 10% at least. As time passes, many of these projects are being canceled, exceeding any reasonable cost to completion. So the yield curve tries to get a realistic estimate of the real inventory of goods coming from the stimulus. Most of us already expect there will be no bullet train down California. Most of us know the war costs are woefully underestimated, and must stop soon.

The Treasury yield curve is steep, the steepness is a measure of expected inventory build up at the producer end of government relative to inventory at the retail end of government. We get measurement uncertainty as government does more than the whole economy can support.

When the Fed uses its independence to keep the yield curve moderately sloped, then neither Congress nor the President has room to deceive the public about the true costs of government production. Greenspan enabled accounting fraud under Bush, and Ben is on verge of enabling accounting fraud under Obama. Lil Bush, by far, is the worst in terms of accounting fraud.