Inflation Problems Depend on Where You Look for Them

Gold last traded at $1,809 an ounce. Silver at $27.94 an ounce.

NEWS SUMMARY: Precious metal prices bounced higher Monday on technical support and bargain-hunting. U.S. stocks fell as a continuous rise in bond yields dented the appetite for risk assets, especially tech stocks.

Wall Street Journal--"Is the central bank thinking about inflation properly?

The Fed defines its inflation target in terms of consumer prices, such as those we pay for cars, toothpaste and haircuts. But in recent decades, prices have often climbed much faster for investment assets, such as homes and stocks, and twice led to booms and busts followed by recessions.

If the Fed does run into problems with the low interest rates it has helped to engineer, it might be because of asset prices and not consumer prices....

As society has become more affluent, more resources have gone into assets like stocks, bonds and second homes. Perhaps not coincidentally, two of the last three U.S. recessions were driven by asset price bubbles - a tech stock boom in the late 1990s and a housing price boom in the 2000s - that caused economic imbalances even though consumer prices made barely a peep.

It is easy to find reasons for discomfort. Tesla's stock price is up more than 300% in the past year. Copper prices are up 56%. The S&P Case-Shiller Home price index is up 9.5%. Freight prices are up 215%; soybeans, 54%, lumber, 117%.

Homes are particularly thorny. They provide a service - we live in them - that is measured in official consumer-price indexes. They are also the most valuable asset in the investment portfolios of many households. The investment part isn't measured in these inflation indexes."