Austrians understand that data only serves to reify, nothing more. Thus nobody should take a model as an absolute or even as a prescient measurement of truth.
In this case I will attempt to use some of the legerdemain of the statisticians that work for the monopoly of data collection, the US Federal Government.
Here in this chart we see the PPI (Producer Price Index) compared against the CPI (Consumer Price Index).
Many times the actual year over year percentage change can be clandestine depending on the basket or averages one uses.
The basic chart I have chosen is nice because it does somewhat give light to the bidding up of higher order goods during the point in time of the next bubble. That being, as we all know, first TARP and later it's three follow up palliatives, QE1, 2 & 3 with Operation Twist in between.
Retrogressively summarizing, as the new money enters the market the higher order stages grow longer, while the consumption base grows narrower. As the theory goes, this should occur based upon genuine savings.
With a suppression of the benchmark as well as Federal Reserve Bank intervention, more money effuses into the market. This expansion of credit is simultaneous. This is due to the monopolized benchmark that the Fed has wielded through government dictum.
Overall, it is quite evident that although companies expand together when rates are suppressed, companies still invest in long term projects that result in the business cycle tending to commence at the higher ordered goods stage. This would be the abstract average concocted by using commodities prices found in the PPI.
Finally, since inflation exists at all times illusively, we must understand that the business cycle occurs within every market and within every business throughout the market process.
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