Posted on 11/11/2010 7:53:35 AM PST by frithguild
It is a war of words, because words stand for ideas. Winston Churchill said that history would be kind to him, because he would write it.
Inflation is not coming, it is here. Perhaps calling debasement of the currency “Quantitative Easing” has allowed the government hand of inflation slip into our pockets a little bit less noticed than in the 1970’s. The dirty secret, however, is not what the Fed has been calling it. The Consumer Price Index, used almost universally to measure inflation, does not recognize inflation when packages have been “Obamasized”:
That’s because of how the CPI—the Consumer Price Index, the traditional (and official) metric of U.S. inflation—is calculated. It uses data from past years—currently the 2007 and 2008 consumer survey—to create a basket of products, goods and services, which it uses to calculate monthly price changes.
However, the CPI doesn’t slice the baloney fine: If a product-x that was sold in a 20 ounce package for $3.99 back in 2007 is now being sold in an 18 oz. package at the same price, CPI does not compute that there was an 11.1% inflation in the price of product-x. Rather, according to the CPI, there was zero price inflation in product-x—because it sold for the same price, regardless of whether the package was 10% smaller.
But this is exactly what seems to be happening in food, as well as in other categories of what one would consider basic necessities: Foodstuffs are being sold in smaller units, cotton clothing is now being sold for the same price, only made of synthetic materials, and so on. A recent blog post on Zero Hedge highlighted the specific case of coffee at WalMart, previously sold in a package of 39 oz. for $9.88, now being sold for $10.48—in a 33.9 oz package. This represents a 22% jump in price. Cases such as this are common, and cropping up like mushrooms on the web—enough to confirm that stealth inflation is happening, without needing to stop by John Williams’ Shadow Government Statistics.
See The Boiling Frog: Effects of QE2 On The Bottom 80% of the U.S. Population http://www.freerepublic.com/focus/f-bloggers/2625439/posts
Everybody who looks at prices knows that packages are getting smaller, but selling at the same old price. This is inflation, pure and simple. So lets now fight this war with a little of our own language. "Look Marge! They used to sell this coffee for $9.98 for 39 oz. for $9.88. Now it's $10.48 for 33.9 oz. It's been Obamasized!"
What if a shopper next to you says, “That’s not fair to say!” A simple retort can be, “Obama and the Democrats gave us trillion dollar deficits, without any way to balance the national checkbook. So the only choice the Bernacke and Fed has is to make the national debt seem smaller by making everything else, like what is in this package, more expensive. They do that by just printing money to pay the debt. So it is fair to say.”
So what would your retort be to the person who says, "That's not fair to say!"?
Even though I was a kid, I remember those times vividly. My Mom would buy coffee that was on sale and freeze them in bags. She also used the basement to hoard paper towels, toilet paper.. anything on sale. Our freezer was filled to capacity with on sale, frozen items. Mom would go to the store on Monday and Friday. I remember how one item for two dollars on Monday would then be two dollars and thirty cents on Friday. Not good times at all. Just a thought.
Let them eat dingleberries!
Leni
Obamasized, I like it...the term, not the action!
Mike
Dow’s down over a hundred, wonder why? What news is coming out tomorrow?
I have even started the “going to three stores” day. It is exhausting but financially worth it. I make out my grocery list for the sales and sales with coupons and go to three grocery stores. It literally takes most of the day but it is the only way to feed a family of five. Fortunately, I learned a thing or two about saving money, shopping wisely and planning meals around what is on sale and what you have in the freezer/pantry. R
Your link also debunks the steak/hamburger meme.
Food prices have escalated for many reasons. Inflation is but one cause. Few seem to understand that the staggering increase in regulation has had a significant impact on food prices. Some of it is necessary, but most of it comes simply from government doing what it does best.
Yeah, but I’m afraid to try and explain it, because I only skimmed that part.
I see the problem. You're eating lousy food. Have you no decency?
;^)
Something "unexpected," of course...
I have been buying canned chilli by the cart full, I plan on filling up my pantry, it can be used to make chilli, sloppy joes, etc... And it keeps for several years and doesn’t need cooking or a can opener as the cans have the pull top on them. If I need to bail on the city I can take them with me and have enough food to get where I am going.
This might be a good time for families to go back to making things from scratch. Flour, eggs, water, milk, oil, butter, yes butter and you can have beautiful cakes, cookies etc.
Ground beef makes beautiful meat loaf
also makes meat balls and lots of them for a family. Meatballs, salad, bread.
Macaroni and cheese with some bbq chicken prepped at home.
Roast on Sunday, with sandwiches and leftovers throughout the week. People today don’t know the value and the good taste at the end of the week when all the leftovers were heated and put on the table again. It was like a FEAST.
If the kids don’t like it...they dont have to eat it. As our parents said: “Dinnertime!” So, if you didn’t like it you didn’t get anythign else and...we didn’t starve because we LOVED our mother’s cooking. All from SCRATCH.
If people would use their good ole American ingenuity...they could eat much better and healthier than at the fast food or take out joints. At least you know what you put into your food.
The CPI information is part of a perfect further response to that WSJ twit who disputed Palin’s allusion to food prices rising.
Good post about the CPI—I think you went over a few folk’s heads.
What is happening now is that some items are rapidly increasing in per unit price (very noticeable) while others are declining in price (which we tend not to notice). This volatility leads to a perception of inflation.
Notice how the politicans (of both parties, of all persuasions) are too gutless to try to explain this issue.
That is a more significant event than whether we actually have inflation or deflation—what we lack is honorable leadership.
The CPI should be adjusted to reflect the purpose for which it is used—if we want to be reasonable. For example, adjustments in Social Security’s CPI (if they continue) should reflect the market-basket that is relevant to that population group.
Informative link BUMP!
1/3 of the width of toilet paper has been removed.
LLS
Cisco announced bad financial news.
LLS
No one would know how to do that unless there was an iPod app that visually described the process and even then they wouldn't take the time.
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