Posted on 11/29/2007 6:32:25 AM PST by Sub-Driver
Yes. We need to quit stationing tens of thousands in Japan and tens of thousands in Germany and bases in over 100 nations around the world.
As far as Germany is concerned, my guess is as many civilians as military just to maintain the base. What is your guess?
“The Fed reports on inflation “ex food and fuel” - and guess what? Those are the two areas in the economy where we’re seeing very tidy rates of inflation.”
If it included gasoline, when the price dropped from $3 to $2.50 everyone would have to start talking about 17% deflation, and now at $3.20 panic about 28% inflation. That makes the measurement useless.
Therefore, we measure inflation by the prices of things that don’t vary wildly from week to week.
What most consumers obsess about is gasoline. Price goes up, price goes down, and it hits consumers directly in disposable income. That’s pretty easy to measure.
What most economists and policy makers should be obsessing about is the price of diesel fuel (or, more accurately, distillate), which hits consumers in the price of everything that has to be shipped — coal to power plants, food to stores, food being harvested, finished goods to/from ports, jet travel, bus travel, you name it.
The fact is that we get only about half as much diesel in cracking a barrel of oil as we do gasoline also blazes by most consumers (the “3-2-1 crack” of crude).
And as a farmer, lemme tell you that five years ago, I used to buy non-taxed (ie “off-road”) diesel for about $0.70/gal.
Today, if I wanted to get a load of diesel, it would cost me about $3.10/gal - without taxes. That makes the price of my goods (hay) go up, which is making the price of milk go up and in between here and there, the cost of trucking hay to dairies and milk from the dairies to the fluid plant and from the fluid plant to your store has gone up, up, up — all due to diesel fuel.
That’s inflation, and it is stupidity on the part of policy makers to not measure it, because consumers *are* seeing it in the end.
The PPI doesn’t include fuel to the extent that fuel is really jacking prices up - in part, because of how fuel price increases are being billed to me.
Shipping companies now give me my bill with the “same” shipping cost as two years ago - some even three years ago.
What has been going up is the “fuel surcharge” on the bottom of the bill. I’d like to know for certain whether these pass-through fuel surcharges are actually being computed into the PPI, because what is being reported for PPI and what I see in my input costs don’t come even remotely close to congruence.
OK, so you want to take an inflation measure that isn’t perfect and reduce it to an inflation measure that’s useless because it bounces up or down 20% every month.
Thanks for your opinion.
It is good for *some* US businesses. It is not a universal good.
Any business that has to buy inputs that are imported from offshore is feeling the hit.
Too many people keep looking at how the $ is doing against the Euro, and for most intents and purposes, I agree, we don’t need to worry about that situation. The EU has their own central bank, and if they want the Euro to not be so strong against the USD, they can take care of it themselves. In this regard, I’m in the crowd that is holding up the smallest violin in the world when the ECB gets to complaining about the USD.
The issue is the Yuan-USD “soft peg” — it keeps China flooding our markets with their crap when, if the currencies were priced correctly relative to each other, it wouldn’t be such a foregone conclusion to move so much production over to China and just jack up the deficits (current and trade).
The other issue is the peg to the middle eastern currencies. If they pull that peg or sell oil in another currency (or a basket of currencies), we’re going to see a sharp spike in the price of oil.
They could smooth it. This isn’t rocket science. Pick a moving average - simple or exponentially smoothed, bridge at least three futures expiry dates and start there. It would result in a better reflection of the input costs to the economy and factor out the exogenous price spikes and dips due to futures speculators.
Just sticking our heads into a hole, which is what is being done now, is far more useless and is being partly reflected in the decline of the USD.
The prices of volatile items do filter into everything else in exactly the method you yourself describe:
“What has been going up is the “fuel surcharge” on the bottom of the bill. I’d like to know for certain whether these pass-through fuel surcharges are actually being computed into the PPI, because what is being reported for PPI and what I see in my input costs don’t come even remotely close to congruence.”
Obviously not only in your situation but every good that gets sent anywhere producers and retailers pass along the increased fuel cost. In that way the volatile costs get reflected in the prices of everything else.
Also obviously the local appliance store does not raise or lower its prices like crazy just because the truck bringing refrigerators charged more one month and less the next. Instead the refrigerator’s price rises based on the trend, which is exactly the smoothing you mention.
The stats that the government puts out concerning inflation are a fiction.
Money of zero maturity grew by 16%.
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