I thought I’d give the hornet’s nest a good whack.
All I know is that my grocery bill has gone way up over the past few years. And even for items that have not gone up, the amount in the bag or box is less. You open the bag and 2/3rds of it is empty. My utility bill has gone up about 10% too. I guess if I ate less and drove less and sat around in the dark, my bills would be lower and I wouldn’t be contributing to inflation.
Inflation is not a problem unless you have to send you son or daughter to college, or buy insurance of any kind, buy food or gasoline. < sarc > So if you are a self sufficient farmer with no kids, forgo health insurance and have your own supply of methanol that you produce yourself then there is very little inflation< /sarc >
See this CNBC article from April 2011:
Inflation Actually Near 10% Using Older Measure
http://www.cnbc.com/id/42551209
As someone who shops very cheaply for groceries, I can attest that low-end prices have risen signficantly over the last 3 years or so. Used to be you could find chicken legs for 49 cents a pound at times, now the cheapest you see are 79 cents. Potatoes? Used to be able to commonly find them for 99 cents for a five-pound bag, the last time I saw them at the price the spuds were very poor quality. Fair quality spuds are 1.49 a bag cheapest now. Store-brand tub margarine? Gone from 1.99 to 2.99.
Other examples abound. Those are significant percentage increases for someone on a very tight food budget.
And this is why a lot of people question the official inflation stats - their own eyes are telling them something very different.
The price for a gallon of gas is coming down. This has nothing to do with Obama, but he’ll sure take credit for the results. Those dirty oil companies may actually wind up saving us. I think a lot of the trouble in the Middle East stems from OPEC looking at our new found energy reserves and realizing that the golden days are coming to an end.
A study in 1999? Those graphs appear to be diverging and it’s over 13 year old data. What are the differences between the old style inflation calcs and the new style ones today?
You get a lot of this stuff on ZeroHedge and elsewhere too. There is an "end is near" crowd of economic bears that instinctively try to paint the worst picture possible at all times. Things are bad enough as it is, there is no need for exaggeration. If you believed the bulk of opinion on ZH, gold should be worth triple what it is now, the EU should have been broken up already and Americans should be rioting in the streets over hyper inflation. Instead Wall Street has run up nicely over the last couple years and anyone who invested wisely did pretty darn well.
It is certainly true that the economy and markets are not healthy (and may well be a house of cards that could implode in the future), but that doesn't mean they will collapse tomorrow, or that hyperinflation will occur in the near term, or that we won't have some good growth quarters, or that there isn't a ton of money to be made.
This guy is an idiot.
About that graph from 1978 to 1999. Notice the gap between the old method and new method grows every year, basically doubling every 10. So a gap of 20 points in 1999 would become a gap of 40 points by 2009 and close to 50 by now. Basically, it is gradual negative compounding of the CPI, which was, IMO, the intention all along of the changes.
“Excluding food and energy”
And there you have it.
and further, meaningless without tracking the employment numbers , and the skyrocketing foodstamp numbers.
and further, behavioral conditioning have many to believe gas prices above 1.00, yes ONE dollar, are “low.”
Massive numbers of government paychecks = price pressures
HOUSING!
“Owners Equivalent Rent” is the basis used in inflation metrics for the cost of your housing.
Since the value of houses has been collapsing, the biggest thing you spend money on, housing, has been rapidly declining within the basket of goods the Fed considers.
Therefore, inflation everywhere else can (possibly) be hidden by the rapidly declining value / cost of houses.
Now, did you really experience a reduction in cash outflow because your house declined in value? No?
So, is the Fed really just using a housing bust that killed your Net Worth as a cover for actual inflation everywhere else in the economy?
Quite possibly.
Who will go do the analysis of “Inflation, excluding Housing”?
Burden is on the inflation hawks eh? How about I Paid 100 bucks to replace a tool that cost 60 bucks 3 years ago.
That is a 10% a year increase in price, ie, INFLATION.
Electrical components are up 200% or more over the last ten years. That is 10% a year.
Got a bag of crimp lugs that have a price tag of 7 bucks a bag on the shelf, Now I pay over a buck a crimp.
Inflation. Of course the Goobermint statistics say there is none, because they dont care about tools or the things that make the country go.
Oh, lets not get into gasoline...
Yesterday I topped $400 for the first time.
Who cares what the government says about inflation? I’m the one who shops and I know how prices have changed.
Obama also says unemployment has shrunk, too. Ya stupid enough to also believe that lie?
Anyone going to buy groceries knows food has gone up significantly. Clothings has, cars have, medical has, most things have. Allowing Obama and the federal government to make claims otherwise takes a feeble minded gullible idiot to believe it. Who ya going to believe, their numbers or your wallet?
Just as all politics is local, so is inflation. Which is the problem with an artificial (concocted) metric like CPI.
Spending and prices vary widely from one location to the next, and from one household to another. Which is why we should pick a basket of commodities or PM’s to index to and stick with that, IMO. Less fudge-factor.
Frequent purchase items are definitely up. I remember prices from 1997 pretty well, so I use that as a baseline for my personal inflation index.
1 lb handcut sirloin steak
Then: $1.99
Now: $11.99
16 yr increase: 600%
1 US gallon unleaded gasoline
Then: $1.19
Now: $2.95
Increase: 148%
25 oz. Extra Virgin Olive Oil
Then: $1.99
Now: $5.99
Increase: 196%
Rent, 2 BR 800 SF apt
Then: $475
Now: $750
Increase: 58%
Nothing specific, but I did go shopping for an automobile recently, and prices seemed to be roughly double what they were in the mid/late 90’s.
Prices for manufactured items (once or twice a decade purchases) are relatively unchanged. Everything else is up big. I worked for a medical device manufacturer before doing my own thing now back around 2002, and prices for things like coiled-steel and plastic feed stock were going up by double-digits YOY.
Overall, I’d peg actual inflation somewhere in the 7-8% annual range since the Fed went full retard back in 2001. So, by design I think, CPI is underestimating inflation by a factor of at least two. The cognitive dissonance for people on fixed incomes looking at their COLA adjustments must be astounding at this point. People in lower income brackets whose spending is mostly groceries, fuel, and energy bills, have to be seeing real-world inflation close to 10% since 2005.
The Weimar Republic had growing unemployment, rising prices (not yet hyperinflationary), business who were having a hard time passing on rising costs or getting business. All of these where the results of their economic policies prior to hyperinflation kicking in. We have the exact same set up in this country. All you need is a trigger point or a series of them that change the psychology of the population to the realization that the money they (both domestic and foreign in our case) hold in their hands is losing its value, that is when money velocity will increase and ever growing rate. I will also add that this always looks like it comes out from nowhere when in reality it was just simmering below the radar, or a back draft may be a better analogy.
Half a billion un/under employed Chinese have kept the inflation pressures on labor rates in check. More jobs are still moving there.
Maybe then it’s just us paranoid types, that have seen the price of paper towels and pasta go up by 30% in 3 years.
Yep, just us...