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Fed President Impersonates Marie Antoinette

William C. Dudley, President and CEO of the Federal Reserve Bank of New York
Stan Honda | AFP | Getty Images
William C. Dudley, President and CEO of the Federal Reserve Bank of New York

It's like Marie Antoinette talking about the falling price of cake: That's the kind of reaction you get when you go to Queens and tell a room full of ordinary folks that the price of iPads is falling. Especially when you're a central banker.

William Dudley, president of the New York Fed, was out in the boroughs—trying to explain why inflation wasn't a factor to a group of people who've been seeing exactly the opposite at the grocery store and at the gas pump—when he said this: " "Today you can buy an iPad 2 that costs the same as an iPad 1 that is twice as powerful"

The response: "When was the last time, sir, that you went grocery shopping?"

And also this, "I can't eat an iPad."

One audience member called Dudley "tone deaf".

You have to feel for Dudley. Bureau of labor statistics data shows core inflation running at a modest 1 percent.

A 1 percent inflation rate is actually substantially below the long-term average rate for the majority of the 20th century.

So when Dudley told the crowd "You have to look at the prices of all things," he was right.

But he missed the broader point.

The average American neither knows—nor cares about—distinctions between core and headline inflation. They don't index their salaries using a GDP deflator—and they don't calculate their grocery bills based on a theoretical market basket.

(On this last point, I wouldn't recommend explaining to a room full of ticked off consumers that Chain-Weighted CPI better addresses the real world cost of living expenditures than previous pricing models.)

Bottom line: Americans see surging gas and food prices—and believe inflation to be a significant factor in their financial lives.

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