Bill Dudley is an iPutz.
The head of the New York Federal Reserve was trying to persuade a group of Queens citizens recently that inflation was under control. So he explained that every generation of Apple’s iPad was getting more powerful per dollar than the previous one.
That keeps inflation in check, Dudley was trying to say, although he didn’t explain this preposterous theory as well as I just did.
Someone in the audience astutely asked, “When was the last time, sir, that you went grocery shopping?” The person who spoke up was trying to make Dudley realize that no matter how tasty iPads might be to technophiles, you just can’t eat the damn things.
And had the guy from the crowd continued he might have pointed out that food, oil, gas, education, insurance, clothing, medicine — need I continue with this list? — are just some of the things that are really crimping the family budget nowadays.
Dudley, you need to know, is a trained economist. In fact, before he decided to slum it as New York Fed chief, Dudley was the very well-paid employee of Goldman Sachs.
It’s important to know Dudley’s background because economists don’t think like you and me. And rich economists, especially, don’t look at price changes like the regular folks who have to dig deeper and deeper into their pockets for the necessities of life.
I assume Dudley has no trouble paying his bills. But that isn’t why he’s so out of touch with inflation reality. For that you can blame something called “hedonics,” which I’ve written about often in this column, although not recently.
Like long robes and mortarboards with tassels, hedonics is something that should be confined to campuses and not be allowed into the real world. Desperate politicians have long used this harebrained theory to make inflation magically disappear.
Hedonics is simpler to understand in an example. Let’s say a $1,000 computer goes up in price by $100. It now costs $1,100.
But someone with control over the inflation scale decides that because technology has improved that $1,100 computer is actually $200 better than the $1,000 machine that came before it.
So instead of creating inflation (when the actual prices go from $1,000 to $1,100) the new computer model is deflationary — it only costs $1,100 even though it gives you $1,200 in value.
That’s what Dudley was getting at with his iPad blunder.
People, of course, still can’t eat a computer. So the notion that better technology is deflationary — not inflationary — is ludicrous.
Even worse, as the guy in the crowd could have pointed out, iPads aren’t on anyone’s everyday shopping list.
We already know how the government and Wall Street like to ignore inconvenient facts that don’t suit their purposes.
That’s why monthly inflation statistics, which have been showing a dangerous upward trend, are excused by focusing on “core inflation” — meaning, without bothering to calculate the rising price of food and energy.
Wouldn’t it be nice if we could exclude food and energy from the family budget so our personal inflation statistics could go down?
But “core inflation” and hedonics aren’t the only ways Uncle Sam makes inflation disappear.
Another way is something called “geometric weighting.” The simple explanation is this: if something goes up in price, it isn’t necessarily inflationary because people will switch to a less expensive alternative.
So, if steak gets too pricey, people will eat hamburgers. Chicken too costly? There’s always bread and water.
Carried to its logical conclusion, this illogical theory of inflation would seem to imply that once people can’t afford anything there would be zero inflation.
We’ll just be naked and hungry. Now you know why Dudley looked like an iPutz in Queens.
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Initial unemployment claims have been going down in most recent weeks. But maybe the reason isn’t what you think.
I got an interesting e-mail from a reader who works at One Stop Career Center in Massachusetts, which he says is a private, non-profit organization that gives career counseling and helps unemployed people file for their benefits.
“About a month ago, the number of Unemployment Insurance (UI) Claims specialists serving walk-in customers . . . was cut from two to one,” this person wrote. “At our center it has meant serving only 30 UI customers rather than 60 per day, i.e. 150 fewer per week.”
He estimates that one- third of these people are at the center to file initial un employment claims.
So in that one center alone, the number of initial claims would be lower by 50 people a week.
Since there are 37 of these centers in Massachusetts alone, that means hundreds of people may not have filed first-time claims because they couldn’t get an appointment.
Could this same tie-up be occurring around the country? jcrudele@nypost.com