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GORDON 
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Posted on: May 03 2011,09:00 |
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Anecdotal, I have noticed the cost of groceries going up fast since the new year. Milk is up approximately 70% in this area. We all know the price of gas has doubled since Obama took office (which reminds me how one of the arguments against new drilling in Alaska [in the area originally set aside for drilling] back in 2007 was that it would take years to see any output. Here we are years later)
Linkally,
http://www.newsweek.com/2011/05/01/sticker-shock.html
QUOTE To this, the Fed has a stock response. It points to the all-urban consumer price index (CPI-U) and notes that it was up only 2.7 percent in March relative to the same month a year earlier. Strip out the costs of food and energy, and “core CPI”—the Fed’s preferred measure—is just 1.2 percent. When Google unveils its new index of online prices, it’s likely to tell a similar story.
....
And the reason the CPI is losing credibility is that, as economist John Williams tirelessly points out, it’s a bogus index. The way inflation is calculated by the Bureau of Labor Statistics has been “improved” 24 times since 1978. If the old methods were still used, the CPI would actually be 10 percent. Yes, folks, double-digit inflation is back. Pretty soon you’ll be able to figure out the real inflation rate just by moving the decimal point in the core CPI one place to the right.
Yay! Good thing we had that stimulus.
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TheCatt
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Posted on: May 03 2011,10:06 |
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QUOTE If the old methods were still used, the CPI would actually be 10 percent
That's cuz the old methods were a) dumb and b) wrong.
The problem most people probably have with inflation versus their perception, is like your comment about milk. For a large number of people, food is a pretty small expense. And, since most inflation is constrained to energy and food, overall inflation has been pretty low. Unfortunately, for a significant number of people, food is a large expense. For those people, inflation is significant, and hurts.
You can translate from the CPI-U to your personal CPI by changing the weights of components. I'm not sure if there is a website that does that, but that'd be kinda cool.
Oh, here's one.
In my family, housing the largest expense. But it should be pretty static cuz we have a fixed mortgage. So 36% of our monthly spending won't ever change for the next 15 years. Based on that website, my inflation rate is 1/2 that of the national average (because we spend very, very little on transportation)
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GORDON
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Posts: 36125
Joined: Jun. 2004
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Posted on: May 03 2011,10:13 |
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(TheCatt @ May 03 2011,13:06)
QUOTE QUOTE If the old methods were still used, the CPI would actually be 10 percent That's cuz the old methods were a) dumb and b) wrong.
If this is true, then there was no inflation during the Carter administration, just logic/math errors?
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| Post Number: 4
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TheCatt
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Posted on: May 03 2011,10:21 |
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(GORDON @ May 03 2011,13:13)
QUOTE
(TheCatt @ May 03 2011,13:06)
QUOTE QUOTE If the old methods were still used, the CPI would actually be 10 percent That's cuz the old methods were a) dumb and b) wrong. If this is true, then there was no inflation during the Carter administration, just logic/math errors?
I didn't say that. Â But I'm saying the methods were improved, cuz they needed improvement. Â His statement that it would be 10% today shows just how badly wrong they would be if unchanged.
Inflation is hard to measure, and there are competing theories. Â One primary reason that people feel that it's higher than it is is (like the article pointed out), inflation measure try to take into account technological improvement. Â However, people don't. Â In the iPad example, for example, they see a $600 tablet. Â Just like they did last year. Â Nevermind that it's better/faster/whatever.
Edited by TheCatt on May 03 2011,10:22
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thibodeaux
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Posted on: May 05 2011,14:01 |
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http://www.newsweek.com/2011/05/01/sticker-shock.html
QUOTE
“I can’t eat an iPad.” This could go down in history as the line that launched the great inflation of the 2010s.
Back in March, the president of the New York Federal Reserve, William Dudley, was trying to explain to the citizens of Queens, N.Y., why they had no cause to worry about inflation. Dudley, a former chief economist at Goldman Sachs, put it this way: “Today you can buy an iPad 2 that costs the same as an iPad 1 that is twice as powerful. You have to look at the prices of all things.” Quick as a flash came a voice from the audience: “I can’t eat an iPad.”
...
And the reason the CPI is losing credibility is that, as economist John Williams tirelessly points out, it’s a bogus index. The way inflation is calculated by the Bureau of Labor Statistics has been “improved” 24 times since 1978. If the old methods were still used, the CPI would actually be 10 percent. Yes, folks, double-digit inflation is back. Pretty soon you’ll be able to figure out the real inflation rate just by moving the decimal point in the core CPI one place to the right.
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| Post Number: 6
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GORDON
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Posted on: May 05 2011,14:15 |
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What, do you just skip my posts? ;-)
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| Post Number: 7
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TheCatt
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Posted on: May 05 2011,14:28 |
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DTMan Instant Classic™
Edited by TheCatt on May 05 2011,14:28
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| Post Number: 8
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thibodeaux
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Posted on: May 05 2011,17:05 |
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I've actually got Ferguson's "Ascent of Money" right here on the nightstand.
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thibodeaux
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Posted on: May 05 2011,17:57 |
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Get in line.
Behind you mom.
Edited by thibodeaux on May 05 2011,17:57
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| Post Number: 11
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GORDON
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Posted on: May 05 2011,18:09 |
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edit - Nah, I won't turn this into a "your mom" thread.
:-D
Edited by GORDON on May 05 2011,18:09
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