Posted: Sat May 17, 2008 5:44 am Post subject: Re: CPI updated - is it believable?
Quote:
Five Things You Need to Know: The Inflation Hysteria
*insert list*
I don't agree with everything said in there.
but I do like this explanation:
Quote:
"What is inflation? It is actually very simple. It is an increase in the quantity of money and bank notes in circulation.
Where is the confusion? Ludwig Von Mises described it this way:
ahh the Austrian economic school of thought. They don't teach that in school unless you're an econ - major.
It is not a popular theory but I personally like it.
I dislike Keynesian economic theory. You can tell what "school of thought" a person falls into by reading what they have to say. Using that metric, mainstream financial news leans very heavily in favor of Keynesian theory.
for "unconventional" news
http://www.financialsense.com/ http://www.itulip.com/
however be warned some of the folks there are equally as incompetent as the WSJ and fox news
but you will definitely get a "different" angle
I found a lot of good information there that was not to be found in WSJ or Forbes until things fell apart. _________________ Men argue, nature acts !
Voltaire
"...In the absence of the gold standard, there is no way to protect savings from confiscation through inflation."
Posted: Wed May 21, 2008 7:01 am Post subject: Re: CPI updated - is it believable?
Quote:
OTTAWA -- Statistics Canada says the rate of increase in prices of goods and services jumped to 1.7 per cent in April, from 1.4 per cent the previous month.
The agency says it was the first time in six months that the overall inflation rate for the country had risen.
As with recent months, costly gasoline was the key contributor to rising inflation as pump prices rose 11.6 percent in April.
Taking fuel prices out of the equation, the inflation rate would have been 1.3 per cent in April.
As well, April saw an increase in the core inflation rate from 1.3 per cent to 1.5 per cent, as recent price cuts at car dealerships moderated.
The Bank of Canada uses core inflation, which excludes volatile items such as energy and fresh fruit and vegetables, to gauge underlying price pressures in the country.
Regionally, Ontario posted the smallest increase in inflation at 1.3 per cent, while prices increased the most in Alberta and Saskatchewan, which recorded a 3.2 per cent annualized rate in April.
I am not quite sure how gasoline prices managed to rise only 5.6% in the USA when in Canada they rose 11.6%? Any ideas? But in any case the practice of seasonally adjusting prices is just tomfoolery!
Quote:
Surprisingly, the Labor Department reported that seasonally adjusted energy prices did not rise from March's levels. Though unadjusted gasoline prices were up 5.6% in April from a month earlier, seasonal adjustments made to that estimate resulted in gasoline prices being down 2% on that basis.
That's despite the fact that gasoline prices posted a string of 16 straight daily record highs in April, according to the motorist group AAA. Other measures of national average gasoline prices, including the U.S. Department of Energy and AAA, showed gasoline prices and rose an average of 9% to 10% over the course of the month. Crude oil prices rose 11% in April.
source: Energy's surprise flatline _________________ The organized state is a wonderful invention whereby everyone can live at someone else's expense.
Posted: Wed May 21, 2008 12:09 pm Post subject: Re: CPI updated - is it believable?
[quote="MrBill"] But in any case the practice of seasonally adjusting prices is just tomfoolery!
[\quote]
I guess seasonal adjustments and "core inflation" are the ultimate "asterisk clause" in any numbers. Make it complicated enough and the people will be bamboozled.
Joined: Apr 04, 2004 Posts: 579 Location: Western US
Posted: Thu May 22, 2008 11:48 pm Post subject: Re: CPI updated - is it believable?
Quote:
Biflation is the state of an economy where the processes of inflation and deflation occur simultaneously. During this period there is a rise in the purchasing prices of commodity items and a fall in the purchasing prices of non-commodity items.
The purchasing price of an item is based on the demand for it and the amount of money in circulation to pay for it.
Biflation is preceded by an overabundance of money placed in circulation within the population by a central bank. Since commodities (such as food, energy,clothing) are essential and are in high demand, the purchase price for them rises due to the increased money available to buy them. This increasing purchase amount is Price Inflation.
One reason is liquidity flees to the safest and most liquid assets. This causes the money supply at upper levels of the pyramid to shrink while the money supply at lower levels of the pyramid expands. This causes deflation as the money supply evaporates away.
Likewise, Biflation is preceded by a decrease in employment within the population. Although there is an increase of money in circulation, fewer people have access to the money to make purchases. As a result, a greater percentage of individual wages is directed toward purchasing commodities and less is utilized for purchasing non-commodity items. Since debt-based assets (such as automobiles, televisions, stocks) are less essential and are in lower demand, the purchase price for them falls due to the decreased money available to buy them. This decreased purchase amount is Price Deflation.
Don't get me wrong, I think CPI is BS. As Bill said the deflation happening in the housing market is offsetting the inflation happening elsewhere. To me the question is. How long will biflation last? Because when it comes to an end we will really know where we are going. _________________ You observed it from the start
Now you’re a million miles apart
As we bleed another nation
So you can watch you favorite station
Now you eyes pop out your sockets
Dirty hands and empty pockets
Who? You!
c.o.c.
Posted: Fri May 23, 2008 2:52 am Post subject: Re: CPI updated - is it believable?
I have never seen the term biflation before, but it is interesting. I would compare it to fixed and variable costs. Or discretionary and non-discretionary spending. Therefore, I suppose biflation could last until all net income is essentially spent on non-discretionary spending. That is food, energy and shelter.
Currenty in the USA approximately 70% of spending in non-discretionary (incl. healthcare). So that figure could conceivably rise further leaving less and less money in the economy for any discretionary spending. However, we have to assume within that 70% basket of non-discretionary spending that there could and would be a reallocation between food, energy, shelter and healthcare as disposable income fell.
What is that term for earning just enough to feed oneself, so that one can keep working? Minimum subsistance, but I thought there was a name for it? In any case biflation like stagflation is a public policy nightmare.
Ironically, I have been watching some documentaries on the Summer of Love, the '68 May Riots and the fortieth anniversary of those watershed events. As socially liberating as those times must have been I cannot help but get the feeling that the Me Generation tore down the fabric of a conservative society with absolutely zero clue as to what to replace it with, and here we are forty years later with the results. How do you like dem apples? ; - ))
Quote:
At this point, moderating inflation seems more of a hope than a forecast. By all rights, the credit crisis, closing in on its one-year anniversary, should have constrained inflation: Money and credit are the stuff of which inflation is made. But it hasn't happened yet.
In the minutes of the April 29-30 policy meeting, released yesterday, Fed officials were ever-hopeful once again, expecting ``inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other prices and an easing of pressures on resource utilization.''
1 + 0 = 1
In other words, if only those pesky raw materials prices would stop going up, why the rate of increase in overall goods and services prices would slow!
This is more an arithmetic observation than an economic forecast. If commodity prices stop rising, and all other components of the consumer price index keep to their existing trend, then, yes, the rate of inflation would be lower than it is now.
The prices of commodities, which account for 42 percent of the CPI, rose 4.8 percent in the year ended in April, according to the Bureau of Labor Statistics. Without the jump in food and energy, core commodities rose just 0.1 percent, according to the BLS. So food (up 5 percent) and energy (up 16 percent) are the primary culprits.
At the wholesale level, crude materials prices were up 34 percent in the past year, led by a 52 percent surge in energy. Without food and energy, crude materials prices were up 25 percent, according to the BLS.
Source: Funds Rate Set to Battle Crisis, Not Inflation: Caroline Baum
Bloomberg, May 22 _________________ The organized state is a wonderful invention whereby everyone can live at someone else's expense.
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