Legendary football coach Bill Parcells once said, “you are what your record says you are.” It was a pearl of wisdom plucked from wherever Yogi Berra used to wander, made into a brutal truth delivered cunningly as a blatant tautology. We’ve all heard of how sports teams are “good on paper” or “better than their record”, but Parcells succinctly dismissed any such notions as not just bias but unhelpful bias. As he also once said,

You can’t dream up confidence. Confidence is born of demonstrated ability.

Over the last more than five years, the US CPI has met the Fed’s inflation target just eight times in those past 62 months. Five of those were recorded in just the last seven months, and they had nothing to do with the greatest monetary team on paper.

US inflation, as it has around the rest of the world, has suddenly disappeared surprising no one apart from the media. The CPI for June was just 1.63% (NSA), right back about where it was conspicuously meandering last summer before all this began. It has been a very strange six months, to say the least; to see what was a predictably short run change become turned into something it was so clearly not.

The real question is why. The oil price base effect was only ever going to be a huge tease, so long as oil prices remained at most steady. But you wouldn’t know it from anything in the mainstream, not the least policymakers who were crafty in their speeches and language, careful not to admit too much but more importantly never shattering the illusion.

It’s not as if oil was just recently stalled out. It has been going sideways for well over a year now, with the past four months a clear downward bias again. There was no other course for the CPI to take except back below the target. Why did Yellen’s Fed risk being made the fool yet again?

That’s clearly the position they have put themselves in, “raising rates” and refusing to clarify exactly why they are doing so. When the CPI, as well as the PCE Deflator if for only one month, was moving toward and above 2% there seemed for the first time since maybe the 1990’s some potential consistency. Now as the Fed still moves forward with its “exit”, all anyone wants to talk about is inflation. Where is it?