At a bagel place in northern New Jersey, this morning: A sign apologizing to customers because prices have gone up and they haven't yet been able to print new menus; plus, some letters tacked on a bulletin board from suppliers apologizing to the bagel place that the suppliers' prices have gone up; and one of these suppliers' letters was pointing to ethanol's effect on food prices.
Implications:
1. The New Keynesians have a point about the importance of "menu costs."
2. Inflation is not going lower anytime soon.
3. Government-backed ethanol has worrisome agricultural effects.
