Regardless, it seems difficult to believe that retail spending could be holding up so well in the face of a deepening real estate bust and incipient recession. We had hoped for a plausible explanation from Merrill Lynch’s chief North American economist, David Rosenberg, who has already declared a recession, but his latest report merely cast skepticism on the sales figures. He says he’ll wait to see what December brings before he attempts to parse the meaning of November’s upbeat numbers.

Concerning the leap in producer prices, it was interpreted just as we might have expected by the resident genius at Deloitte, chief economist Carl Steidtmann, who had this to say: "What the market is beginning to realize is that there's a much more severe inflation problem that is going to make it more difficult for the Fed to cut interest rates." Here the U.S. sits, inches from the maw of the deepest deflationary abyss since the Great Depression, and our boy Carl is worried sick, evidently, about the "threat" of "inflation." Save your breath. And to all of you, dear readers, I would suggest tuning out anyone who even uses the word "inflation," unless it is to explain why it is exactly what we should NOT be worried about.

After all, what is a niggling consumer inflation that can be reckoned in mere tens of billions of dollars when a deflationary juggernaut that is feeding off $510 TRILLION of very thinly collateralized derivatives has laid seize to the credit markets? And that is the crux of it, stated so simply that I would challenge the inflationists to try and refute it. No, I take that back. No more debates. In the dozen or so that I’ve already had with various inflationists, they have never scored a point. As how could they? Arguing that the Fed is going to inflate its way out of this mess is like asserting that a dash of clove oil on one’s tongue will cure lung cancer.

Anyway, inflation, especially in the housing sector, is what we should be praying for. Not that the Fed isn’t trying to bring it about. What the heck are guys like Steidtmann smoking, anyway?