Fighting Over Inflation

Vice Chairman of the Federal Reserve Donald Kohn played down worries that the Fed's lending program will lead to a "surge in inflation" and signaled that the government may make more credit available to banks in need during a speech yesterday at Vanderbilt University in Nashville, Tenn.  Bloomberg, Retuers, and the Wall Street Journal report that the vice chairman also signaled that the government may make more credit available if the need arises. The central bank's balance sheet has doubled to $2.19 trillion, Bloomberg notes. The WSJ says that, "through the Fed's actions to rejuvenate the economy and the flow of credit, its balance sheet has ballooned, sparking inflation concern. Officials have discussed whether targets for the size of the Fed's balance sheet or the monetary base and reserves ‘would provide some assurance that policy is pointed in the right direction,' " in Kohn's words.

As described by Reuters, former Fed Chairman Paul Volcker challenged the vice chairman at one point about a 2 percent inflation goal. Volcker, "who is famous for halting runaway inflation in the U.S. economy in the 1980s by raising interest rates sharply," questioned Kohn on "how the Fed can talk about ‘price stability' in the same breath as a 2 percent inflation goal, arguing that the target should be lower. But Kohn said a 2 percent goal would give the Fed more flexibility at times of economic shock, because real interest rates start off higher as the economic cycle turns down. The parrying ended with Kohn saying to Volcker: ‘I'm not going to convince you, am I?'"

CNNMoney sets expectations for next week, during which 28 percent of the companies on the S&P 500, or about 140, will report earnings. So far, with 10 percent of the index reporting, "profits are on track to have shrunk 37.4 percent from a year ago, according to the latest from Thomson Reuters," the site says. First up this week is Bank of America (BAC), which according to the Dow Component, will have earned 5 cents per share. Compare that with 23 cents a year ago. Other companies to report tomorrow include IBM (IBM), whose earnings should be about equal to a year ago. Yahoo (YHOO) will report on Tuesday, Morgan Stanley (MS) on Wednesday, and Microsoft (MSFT) and Amazon (AMZN) on Thursday. 

Also this week, Congress will begin hearings on an energy and global warming bill that could "revolutionize how the country produces and uses energy," BusinessWeek reports. If lawmakers put up too much resistance, the Obama administration has said it is ready to  "use decades-old clean air laws to impose tough new regulations for motor vehicles and many industrial plants to limit their release of climate-changing pollution."

Bolstering the administration's eco-friendly stance is a report released Friday by the Environmental Protection Agency, which found that carbon dioxide and five other emissions "endangered the health and welfare of current and future generations," according to the WSJ, which gives the story the top spot in its weekend edition, the report is the first "formal recognition" by the government of the threats posed by climate change. "The impact of the EPA finding could be dramatic," the paper says. As a result of the findings, the EPA may raise fuel-efficiency standards for cars and force automakers to manufacture more hybrid cars.

The Washington Post declares it's "a Golden Age for cheapskates." Super bargain hunter Jill Berry, a mother of three living in Maryland, has taken to online giveaways, which have thus far netted her "T-shirts, cleaning products, a small portable vacuum, olive oil, beef jerky and—best of all—a Nintendo DS." "The recession has emboldened a certain kind of consumer: The mooch. With dwindling retirement savings, a higher cost of living, and wobbly job market, they don't just want discounts on items they used to pay full price for without a second thought. They want freebies," the story says. And businesses are playing into demand. In February, Washington, D.C., McDonald's, for example, gave away medium-size hot or iced coffee from 5 a.m. to 9 a.m. with no purchase necessary. The read is worth it, especially for  all the tips, tricks and Web sites referenced from which budding cheapskates at home can learn how to get their own free minutiae.