Anyone Think Inflation Is (Gasp) Understated

Bloomberg.com ^ | 19 November 2003 | Caroline Baum

[shrinkermd]

Nov. 19 (Bloomberg) -- No one much cares about official price measures anymore because inflation is low enough so as not to be a factor in business or consumer decision-making.

That, of course, is the Federal Reserve's standard definition of price stability. While the rest of us might benefit from an actual numerical equivalent, the Fed has guided us to the Promised Land without a formal inflation target, and it's not about to institute one as long as Alan Greenspan is at the helm.

[shrinkermd]

FYI

[ClearCase_guy]

There could be something here. However, I'm struck by the overall scattershot approach to economics I see in the media:

Bush is a disaster because stocks are down. What? They're up?
Bush is a disaster because growth is down. What? It's up?
Bush is a disaster because employment is down. What? It's up?
Hey, guys, I've been thinking about inflation ...

[waterstraat]

The prices I pay are up by more than the reported inflation rate. I also know that hospital costs, and tuition costs are increasing by much more than the reported inflation rate.

[R. Scott]

The last I read, the official rate of inflation was based on the increase in cost of manufacturing tools, construction and other high dollar non-consumer items.
I’m a poor boy. The things that I am concerned with – food, clothing and shelter (and of course Budweiser, Jack Daniel’s, Oreos and Marlboro) go up in price much faster than the Consumer Index.

[waterstraat]

Bush is a disaster because stocks are down. What? They're up? Bush is a disaster because growth is down. What? It's up? Bush is a disaster because employment is down. What? It's up?

Employment is not up, it is down. WE are not even creating enough jobs each week to employ the additional 50,000 more legal immigrants that come here each week.

Stocks will go up if profits go up, and profits will go up if you fire an American worker making $10 an hour, and replace him with a red chinese for 61cents an hour. But that does not mean "our" economy is doing good, it only means that the economy and jobs in India and China are booming.

[gcruse]

Wasn't it Alan Abelson of Barron's who said any businessman basing investment decisions on government figures of economic performance is out his mind?

[Moonman62]

Inflation occurs when there is something you have to buy goes up in price, and you can't defer the purchase, or you can't find a substitute at the old price.

Throughout history, war has been the main cause of inflation.