The Labor Department reported today that the price of non-oil imports rose by 1.1 percent in March. This brings the annual rate of increase in non-oil import prices to 9.6 percent over the last quarter. This should concern people because higher import prices translate into higher consumer prices, leading to a lower standard of living. Non-oil imports are equal to approximately 12 percent of GDP. This means if import prices continue to rise at their recent rate, it will raise inflation and reduce our standard of living by a bit more than 1 percent by the end of the year.

Those wondering why import prices are rising don’t have to look far. Import prices are rising because the dollar is falling. A falling dollar means that it takes more dollars to buy the same number of yen or euros. If Japanese and European producers are charging the same price for their products in their own currencies, then the goods they export to the United States will cost us more dollars. That one is pretty straightforward.

The next question is why is the dollar falling? The answer is that the dollar is falling because it was too high.

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Many of my friends have asked my why I oppose the housing bailout schemes that many progressives are pushing to keep moderate income homeowners in their homes as homeowners. The answer is simple: they are bad deals for homeowners – or least homeowners in bubble inflated markets.

I always thought that progressives were trying to improve the plight of low and moderate income people. These bailout plans are likely to make them worse off, compared to a scenario in which they returned to renting. At least that’s what the numbers show, and given the choice of relying on DC policy wonks or arithmetic, I’ll go with arithmetic every time.

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