The View From Pluto -- U.S. Inflation Tops 10% (Caroline Baum)

  Every once in a while, I write something that inspires readers. The inspiration is usually to tell me what a knucklehead I am.

  Feb. 23, 2007 -- (Bloomberg) -- Every once in a while, I write something that inspires readers. The inspiration is usually to tell me what a knucklehead I am.

  Earlier this week, a column on inflation -- what it is (a monetary phenomenon) versus how the Federal Reserve talks about it (seemingly exogenous price increases) -- prompted the ``regulars'' to check in.

  This select all-male club (women, no doubt, have better things to do with their time) can best be described by the shared belief system of its members: a fixation with all things gold; an ingrained distrust of any statistic published by the government; and a firm belief that the Federal Reserve's discontinuance of weekly publication of the M3 monetary aggregate last year was just another sign the U.S. is headed down the road of Weimar Germany.

  My Feb. 20 column prompted a date offer from a man in San Diego, one marriage proposal, a nomination to fill a vacant Fed Board seat, an endorsement for president, a few compliments for enlightening readers on the inflation process and a serious dressing-down from the rest for my incredible naivety.

  Redemption may be in the offing, however. I learned I was, ``making progress toward clearheaded thinking with each passing week,'' according to the blog, ``The Mess That Greenspan Made.''

  Alas, my assertion that inflation was running at about 2.5 percent revealed me to be ``as out of touch as the Fed Chairman.''

  My feedback tends to fall into some broad general categories:

  The Close-But-No-Cigar Department

``Precisely why did the Fed discontinue reporting M3?'' writes one reader, echoing a burning question among conspiracy theorists.

  The Fed announced on Nov. 10, 2005, that it was discontinuing publication of M3 as of March 2006. Ben Bernanke hadn't even been confirmed by the Senate as the new Fed chairman, and already in the Land of Black Helicopters he was acting to subvert the U.S. dollar (at least what was left of it after Alan Greenspan's 18-year tenure).

  I'm convinced the coincidence of ``money,'' ``Federal Reserve'' and ``inflation'' in the same article triggers a pre- set Google alert. The M3 message is stored and ready to go, relevant to the discussion or not.

  The M3 conspiracy theorists (CTs) seem to ignore the monetary base (currency and bank reserves), which is the only instrument the Fed controls. Annual base growth slowed to 2.7 percent in January from 10 percent four years ago.

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