Joined: May 18, 2006 Posts: 4375 Location: Minneapolis, MN
Posted: Wed Apr 16, 2008 3:32 pm Post subject: Re: CPI updated - is it believable?
ShaneT34 wrote:
Quote:
emersonbiggins wrote: The CPI is bogus; it is used to temper the COLA increases in SSI & other entitlement benefits. Can you imagine it any other way?
There is an excellent piece discussing the systematic distortion of the CPI over the years resulting in reduced SSI, et al. benefits payments in this month's (May 2008) Harper's Magazine. Unfortunately its behind a paywall here:
According to the EIA's data, gasoline prices for the average of all grades increased by 3.9% in March.
WTF are they smoking at the CPI Calculator Headquarters????
Maybe they are attempting to factor in reductions in consumption into the calculations. But that seems a little bit like saying "food prices fell because everyone starved to death". _________________ "www.peakoil.com is the Myspace of the Apocalypse."
Posted: Wed Apr 16, 2008 4:01 pm Post subject: Re: CPI updated - is it believable?
The current CPI omits substitutions. If food doubles in price & people resort to cannibalism, there is no inflation because cannibalism provides the same value as food. _________________ People first, then things, then dollars.
There will be enslavement, cannibalism, & zombie invasions.
According to the EIA's data, gasoline prices for the average of all grades increased by 3.9% in March.
WTF are they smoking at the CPI Calculator Headquarters????
Maybe they are attempting to factor in reductions in consumption into the calculations. But that seems a little bit like saying "food prices fell because everyone starved to death".
Your catching on now...by the way Kevin Phillips matches my 7 - 9% inflation rate in the Harpers' article....
I'll type out the end of it...
THE US ECONOMY EX-DISTORTION
The real numbers, to most economically minded Americans, would be a face full of cold water. Based the criteria in place a quarter centruy ago, today's U.S. unemployment rate is somewhere between 9 and 12 percent; the inflation rate is as high as 7 or even 10 percent; economic growth since the recession of 2001 has been mediocre, despite a huge surge in the wealth and incomes of the superrich, and we are falling back into recession. If what we have been sold in recent years has been delusional "Pollyanna Creep," what we really need today is a picture of our economy ex-distortion. For what it would reveal is a nation in deep difficulty not just domestically but globally.
Undermeasurement of inflation, in particular, hangs over our heads like a guillotine. To acknowledge it would send interest rates climbing, and thereby would endanger the viability of the massive buildup of public and private debt (from less then $11 trillion in 1987 to $49 trillion last year) that props up the American economy. Moreover, the rising cost of pensions, benefits, borrowing, and interest payments -- all indexed or related to inflation -- could join with the cost of financial bailouts to overwhelm the federal budget. As inflation and interest rates have been kept artificially suppressed, the United States has been indentured to its volatile financial sector, with its predilection for leverage and risky buccaneering.
Arguably, the unraveling has already begun. As Robert Hardaway, a professor at the University at Denver, pointed out last September, the subprime crisis "can be directly traced back to the (1983) Bureau of Labor Statistics decision to exclude the price of housing from the Consumer Price Index...With the illusion of low inflation inducing lenders to offer 6 percent loans, not only speculation run rampant on the expectation of ever-rising home prices, but home buyers by the millions have been tricked into buying homes even though they only qualified for the teaser rates." Were mainstream interest rates to jump into the 7 to 9 percent range -- which could happen if inflation were to spur new concern -- both Washington and Wall Street would be walking in quicksand. The make-believe economy of the past two decades, with its asset bubbles, massive borrowing, and rampant data distortion, would be in serious jeopardy. The U.S. dollar, off more than 40 percent against the euro since 2002, could slip down and even rockier slope.
Posted: Wed Apr 16, 2008 4:19 pm Post subject: Re: CPI updated - is it believable?
Tyler_JC wrote:
The CPI is completely bogus.
Welcome to the dark side!
Now, the obfuscation is irrefutably apparent (to us, anyways) in an easily researched product like gasoline. Just imagine the hedonics and heuristics taking place over in areas like "owner's equivalent rent" and agricultural consumables. _________________ "It's called the American Dream because you'd have to be asleep to believe it."
Joined: Sep 25, 2004 Posts: 4542 Location: Boston, MA
Posted: Wed Apr 16, 2008 4:36 pm Post subject: Re: CPI updated - is it believable?
My guess up until reading this thread was 5-6% annual inflation (about 50% higher than the published figure) but if we keep seeing bullshit numbers like this, I'm going to push my guess higher.
I'm just so damn tired of being treated like an idiot by these con men. Don't they know we have access to THEIR OWN F*CKING DATA???
_________________ "www.peakoil.com is the Myspace of the Apocalypse."
Posted: Wed Apr 16, 2008 4:45 pm Post subject: Re: CPI updated - is it believable?
Tyler_JC wrote:
I'm just so damn tired of being treated like an idiot by these con men. Don't they know we have access to THEIR OWN F*CKING DATA???
This is the point where we could use some responsible journalism, instead of just patching through press releases from the higher-ups as the indelible truth.
Having a public critical of something other than the top 3 American Idol finalists would help as well. _________________ "It's called the American Dream because you'd have to be asleep to believe it."
Joined: Aug 30, 2005 Posts: 277 Location: Second Vermont Republic
Posted: Wed Apr 16, 2008 5:26 pm Post subject: Re: CPI updated - is it believable?
I'm not a doomer, and some have even called me a cornucopian here (I prefer cautiously optimistic) but these numbers can't be right.
I own a small inn so I have certain, regular expenses. My egg deliveries have gone from $1.50 a dozen to $2.50 a dozen over the least year. My property taxes have gone up 10% plus each of the last six years. My fuel is twice what it was a couple of years ago and my electricity is up about 30%. My plowing service is up about 40% in the last couple of years. Milk is up, bread is up, deliveries are up, linen service is up. Sometimes they call it a fuel surcharge, but the end result is the same.
I pay more for pretty much everything, at least 10% more year on year and sometimes a lot more. This is about the third year in a row I've seen this.
My own services have just barely crept up in cost, but obviously this has got to change or I'll be out of business. And that's the crappy thing. Everyone is paying more, charging more, but nobody is making any more money off this.
Well, except the Saudis, I guess. And the Haliburtons of the world.
Posted: Wed Apr 16, 2008 8:39 pm Post subject: Re: CPI updated - is it believable?
Twilight wrote:
It's like communism - lots of statistics every day showing everything is OK, everyone believing their eyes.
But, unlike communism, I thought we, or maybe I should say you, as I don't live in the U.S. now, had a free and competitive press. But, this CNN story looks like a puff piece. The kind of thing you'd see in Cuba or the old days of the Russian Pravda newspaper. Even their headline seems mushy, "Prices edge higher". Some edge - its like a guillotine!
The folks who wrote this presumably live in the real world. They see the prices of eggs and property taxes and health care and for sure they either buy fuel or at least public transit tickets. And, they do fly too, and those airline fares are much steeper.
(By the way, not sure if this is the case in the USA, but around here, our public transit fares are up 10% over last year, from $2.50 cash fare to $2.75.)
Joined: Dec 28, 2005 Posts: 298 Location: Toronto, Ontario
Posted: Wed Apr 16, 2008 9:03 pm Post subject: Re: CPI updated - is it believable?
Denny wrote:
(By the way, not sure if this is the case in the USA, but around here, our public transit fares are up 10% over last year, from $2.50 cash fare to $2.75.)
Damn TTC (Toronto Transit Commission). Adding insult to injury they then go and spend $3 million on building a bunch of stupid ancient Egyptian/Greek pillars in Museum subway station. This city gets the idiots in power at City Hall that it deserves.
Have you ever wondered why the CPI, GDP and employment numbers run counter to your personal and business experiences? The problem lies in biased and often-manipulated government reporting.
I love this site. John has done his homework. Even recreates on the M3 money supply the Fed stopped reporting.
He puts the current CPI at about 7.25%. Seems about right. _________________ Civilization is a personal choice.
Joined: Apr 16, 2008 Posts: 120 Location: Western PA, USA
Posted: Wed Apr 16, 2008 9:57 pm Post subject: Re: CPI updated - is it believable?
A couple of questions I have to ask are 1. When the U.S did these adjustments to reduce the rate of inflation via "hedonics" and substitution methods, did they reduce the inflation rate data in proportion in the previous decades such as the 60s and 70s? Second question is, does Europe or other Democratic countries use hedonics to reduce the inflation rate? 3. If inflation is really 6 or 7 percent instead of 3 or 4 percent would that mean that the economy during most of G.W.B terms and even Bill Clinton's terms in office were in recession most of the time? Would skyrocketing debt be the mirage that made people and businesses seem wealthier even as the economy was hardly growing if inflation was and is higher, thus G.D.P gets deflated down?
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