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From M*..... Dec. CPI little changed. Inflation not a threat. These guys ever shop for GROCERIES!?
Max, Max, Max... you just don't understand, and here I've tried and tried to explain this to you for a couple of years now...
See, if things go up, that mean that they are "volatile", and are banished from the official CPI because of unruly behavior. Just like me getting sent to the principle's office all the time for bad citizenship. Except they called it "deportment" in those days. Where would things get to if we took volatile, unruly, undeportmented type stuff and paid any attention to it?
When people or things don't act the way that you'd like them to, the best thing is just to ignore them. OK now, you got all this sorted out?
The CPI metric cited in the article does include food, the price of which was measured as increasing (""Food prices rose 0.2% after falling in November. The increase was driven by a rise in cereal and meat prices."). Gas prices dropped (over the period being measured), showing that diversification across multiple volatile assets can decrease volatility, which is the main virtue of mutual funds.
Inflation is the reason we invest. Were paper currencies inclined to maintain values over long periods, there'd be little need to own stocks, gold, real estate, foreign currencies, or mutual funds.
What did you (or your Dad) pay for a new auto in: 1970...1985... 2000... 2012? Now, today's cars are better in many respects. However, they're also smaller and lighter, have smaller engines, take fewer man hours to build, and rely much more on increasingly inexpensive electronics.
Don't care where you put this thread. But relevant because gets to the heart of investing.
Ya, Maurice, I might have categorized this as "off-topic." I just plain did not do that, because I was busy expressing myself rather than worrying about which dumb pigeon-hole my thought should be plugged into.
I look at the price of hamburger. In 1963 it was .39 CENTS per pound. just 18 months or so ago, it was over $2.00 per pond. In 2011, as I recall, it suddenly leaped to $3.89 per pound. What gives? Wifey eats lots of rice. Rice is sky-high. Wheat Thins? What are they putting into those things to make them so expensive? Near the end of his life, poor, ol' pitiful Howard Hughes sent for a particular brand of vanilla ice cream straight from France. It seems that even the most ordinary stuff is exorbitant that way, now. (OJ, love the facetiousness. You sound like me, goddamit.)
I think it really requires being creative, whether it be going to Costco for bulk items (although even that really requires shopping skills, as not everything at Costco is a great deal), joining Supermarket programs, clipping coupons (which, with online sites and other programs these days, is becoming somewhat easier) and other tactics. However, I'll second that prices are going up and I think that will continue, along with tactics like smaller packaging (my favorite is toilet paper packaging that is smaller but "now stronger." lol)
Investing does not always keep up with inflation and some industries can certainly see negative impacts from rising raw material costs that they may have trouble passing on. One has to start being more specific in their view if they believe inflation is going to be a more serious issue going forward (or at least hope their fund manager/s see things similarly.) At the end of the day, it boils down to a dollar in 1913 is worth about 8 cents today; one can debate all they want about innovation, etc, but at some point with the rate the currency is headed, there is a point where no more juice can be squeezed out of the lemon.
Reply to @Old_Joe: Looking at the data, you'll see that groceries in general have risen pretty quickly, but that eating out has risen only modestly (I've seen reports about how the Dardens and such are racing to the bottom in prices due to the economy). Put it altogether and you get a combined monthly increase of 0.2%, and an increase for 2011 of 4.7%.
Food at home rose 6% in the past year, including rises of 7.9% for meat, poultry, fish and eggs, and 8.1% for dairy products. But if you have a sweet tooth, that stuff only went up 3.8%.
People tend to be more sensitive to losses and less sensitive to gains, which is why they notice small losses more than significant gains, and likewise why they notice the prices that are going up but not so much what has declined or not gone up much. That makes the averages appear worse than they actually are.
Hell, that's easy. Cows eat corn and corn's going to make ethanol fuel now days. And, as you know, beef and ice cream both come from cows. So when the price of petro rises, all them other things go up too. And that's no BULL... (-:
Good way to put it: "no more juice can be squeezed from the lemon." Going back to the 1970s, I recall a conversation with a fellow undergrad. ..His family originally came from Chile. He told me: "Americans are going to have to get accustomed to paying more for LESS." He was right. And I understand that governments like just a bit of inflation. Makes paying back bondholders a better deal for gummint. But wars and wars and tax cuts for the uber-wealthy have served to squander whatever advantages we COULD have had. and still, we keep on electing candidates from choices made available to us by just two big political parties. How stupid are we?
Back in the early 60's, rono could go to the grocery store and buy a loaf of bread with a quarter. This same silver quarter today is worth about 25 times face in melt value or about $6 or so. I can go to the store and get a couple of loaves of bread today - with that same real quarter.
As for the CPI, it's all in the formulae they use. Over half is subject to Hedonic adjustments. That means that if it's a new and improved product or service, they can charge more and it doesn't count. Ok, that's reasonable but only if I'm still able to buy the old and unimproved version. Hell, Greenspan even went far down this road as to say that if steak became to expensive, they could substitute hamburger.
What has been helping to hold the CPI down is the price of electronics AND the internet and globalism.
This is John Williams's website on alt gov't data. He shows that if they use the formula from the '90's, CPI is a little over 6% but if they go back to the '80's, it's about 11%.
So, please don't tell me about inflation being tame or undercontrol or any of that bullsh*t.
And there's more than one way to measure food inflation- if "English" muffins get any thinner or smaller they will have to relabel them as "see-through cookies".
Reply to @Maurice: The problem is actually bigger than you think. THEY do shop for groceries. Except if THEY don't feel it in their pockets, THEN it is not a problem for THEM, and hence it is not a problem.
Every time after a recession or depression, the gap between the rich and poor widens. History proves it. Until one day all hell breaks lose and you get a revolution. Then we start over again.
Rono and others--your impressions of the difference in CPI numbers after the Boskin report changes were made is wildly exaggerated. Check out the paper "Misconceptions of the CPI" by Greenlees and McClelland on the CPI website under CPI Publications. The differences between using a Geometric Mean calculation and the old Laspeyres formula are tiny.
Also hedonics are not used on over half the items. Far less. The differences in index numbers with and without are generally small. The entire list is on the CPI website. Of course, it is financially rewarding for some to exaggerate the differences isn't it?
Reply to @MaxBialystock: You can still do change category after the fact. Are you aware that you can edit your opening topic and change the category? I also post in wrong category occasionally in a rush to post but come back and edit my post. You can do that so as well. It is not a biggie.
Comments
See, if things go up, that mean that they are "volatile", and are banished from the official CPI because of unruly behavior. Just like me getting sent to the principle's office all the time for bad citizenship. Except they called it "deportment" in those days. Where would things get to if we took volatile, unruly, undeportmented type stuff and paid any attention to it?
When people or things don't act the way that you'd like them to, the best thing is just to ignore them. OK now, you got all this sorted out?
The CPI metric cited in the article does include food, the price of which was measured as increasing (""Food prices rose 0.2% after falling in November. The increase was driven by a rise in cereal and meat prices."). Gas prices dropped (over the period being measured), showing that diversification across multiple volatile assets can decrease volatility, which is the main virtue of mutual funds.
See, this is on topic after all
What did you (or your Dad) pay for a new auto in: 1970...1985... 2000... 2012?
Now, today's cars are better in many respects. However, they're also smaller and lighter, have smaller engines, take fewer man hours to build, and rely much more on increasingly inexpensive electronics.
Don't care where you put this thread. But relevant because gets to the heart of investing.
Investing does not always keep up with inflation and some industries can certainly see negative impacts from rising raw material costs that they may have trouble passing on. One has to start being more specific in their view if they believe inflation is going to be a more serious issue going forward (or at least hope their fund manager/s see things similarly.) At the end of the day, it boils down to a dollar in 1913 is worth about 8 cents today; one can debate all they want about innovation, etc, but at some point with the rate the currency is headed, there is a point where no more juice can be squeezed out of the lemon.
Looking at the data, you'll see that groceries in general have risen pretty quickly, but that eating out has risen only modestly (I've seen reports about how the Dardens and such are racing to the bottom in prices due to the economy). Put it altogether and you get a combined monthly increase of 0.2%, and an increase for 2011 of 4.7%.
Food at home rose 6% in the past year, including rises of 7.9% for meat, poultry, fish and eggs, and 8.1% for dairy products. But if you have a sweet tooth, that stuff only went up 3.8%.
People tend to be more sensitive to losses and less sensitive to gains, which is why they notice small losses more than significant gains, and likewise why they notice the prices that are going up but not so much what has declined or not gone up much. That makes the averages appear worse than they actually are.
And that's no BULL... (-:
Back in the early 60's, rono could go to the grocery store and buy a loaf of bread with a quarter. This same silver quarter today is worth about 25 times face in melt value or about $6 or so. I can go to the store and get a couple of loaves of bread today - with that same real quarter.
As for the CPI, it's all in the formulae they use. Over half is subject to Hedonic adjustments. That means that if it's a new and improved product or service, they can charge more and it doesn't count. Ok, that's reasonable but only if I'm still able to buy the old and unimproved version. Hell, Greenspan even went far down this road as to say that if steak became to expensive, they could substitute hamburger.
What has been helping to hold the CPI down is the price of electronics AND the internet and globalism.
http://www.shadowstats.com/alternate_data/inflation-charts
This is John Williams's website on alt gov't data. He shows that if they use the formula from the '90's, CPI is a little over 6% but if they go back to the '80's, it's about 11%.
So, please don't tell me about inflation being tame or undercontrol or any of that bullsh*t.
peace,
rono
Every time after a recession or depression, the gap between the rich and poor widens. History proves it. Until one day all hell breaks lose and you get a revolution. Then we start over again.
So you really think that natural gas prices have declined for the retail user?
Also hedonics are not used on over half the items. Far less. The differences in index numbers with and without are generally small. The entire list is on the CPI website. Of course, it is financially rewarding for some to exaggerate the differences isn't it?