How is it that the producer price index, the cost of goods needed to create the things consumers buy, can go up forever while the consumer price index remains relatively low? Should this not imply that the cost of producing should be outweighing the value generated by sales at some point?
This graph seems to suggest that the natural, coupled inflation of CPI and Producer Price Index decoupled in the late 80s and CPI no longer seems to rise with PPI. How is this possible? Are we due for a massive correction where prices make up for lost time? Does the Fed's control over interest rates really have enough influence to bottle up this dynamic?