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MIT "Billion Price Project" Confirms US Prices Surging (In Case There Was Any Confusion)

Tyler Durden's picture


Just in case there was still any lingering doubt that prices in the US are surging far above whatever the CPI may indicate, we present the MIT Billion Price Project. Unlike the CPI which is a gross misrepresentation of what is really happening on the ground in price terms, MIT actually compiles real time price data about a universe of products. From the methodology section: "our data are collected every day from online retailers using a software
that scans the underlying code in public webpages and stores the
relevant price information in a database. The resulting dataset contains
daily prices on the full array of products sold by these retailers. Our
data include information on product descriptions, package sizes,
brands, special characteristics (e.g. “organic”), and whether the item
is on sale or price control." The attached chart confirms what anyone (but not Ben Bernanke) who actually buys goods and services in the US knows all too well.

As for monthly inflation, compared to the CPI, it is also not pretty:

Link to source.

h/t Paolo


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Fri, 02/11/2011 - 15:09 | 953643 butthead
butthead's picture

I was not confused as I know that the #1 job of the US gov't today is to lie to the sheeple.

Fri, 02/11/2011 - 15:29 | 953714 unwashedmass
unwashedmass's picture

none of this matters a bit because Ben literally does not give a shit. he is right, reality is wrong....

and this country is going to be in flames before he admits it....

not that that will matter as he and the entire upper tier of management from the big six banks will be long gone, nicely situated on their private islands with their own private militias.

Fri, 02/11/2011 - 15:34 | 953748 nope-1004
nope-1004's picture

What's clear on those charts is the deflationary spiral that spurred Benocide into action prior to QE1.


Fri, 02/11/2011 - 16:05 | 953888 PeterSchump
PeterSchump's picture

...and that deflationary spiral ended when? 12/2008


and QE started when? Nevermind

Fri, 02/11/2011 - 17:35 | 953976 More Critical T...
More Critical Thinking Wanted's picture

...and that deflationary spiral ended when? 12/2008

Well, what matters to "hard to get rid of (sticky) inflation/deflation" is core CPI, not CPI:

See how core CPI clearly showed that there was inflation trouble in the 70s? See how it filtered out several large swings in commodities prices that were temporary and which needed no Fed response?

Why do people here still pretend that the Fed is watching CPI? The Fed is watching core CPI and is doing it for good reasons:

Core CPI was trending lower prior QE2 and inflation was stubbornly low - just like it did in Japan before deflation hit full force ...

All in one, to me the two graphs are in pretty good agreement - considering the wildly different methodology and composition! The CPI will also lag a bit - while the MIT price index is instantaneous - so you can see this lag in the charts.

So what this tells me is that the next CPI reading might show a big uptick.

Looks like the MIT price index has validated CPI and is predicting that QE2 worked?


Fri, 02/11/2011 - 18:10 | 954318 ColonelCooper
ColonelCooper's picture

If you are correct about lag time, then of course it will show a big uptick.  You think the Mit index is going to level out?  I'll bet you a Coke it doesn't.

If by QE2 working you mean stopping deflation, then sure.  But you think we can just end it and coast?  We're playing the Yodeling Mountain Climber game on Price is Right, and we aren't quitting until we fall off the top.

Sat, 02/12/2011 - 05:02 | 955387 More Critical T...
More Critical Thinking Wanted's picture


If you are correct about lag time, then of course it will show a big uptick. 

Well, I don't have the data series to analyze it precisely, but if you do a quick and dirty analysis of the graph you can match up the various peaks and bottoms and notice a pattern of CPI being shifted by about a month from the MIT data's peaks and bottoms.

If you consider that the CPI is an weighted average based on reporting, averaged over the reporting period (a month), while the MIT data is raw, instant price data uncut straight from live trade transactions on the Internet, the roughly one month delay visible kind of makes sense, doesn't it?

If that observation is correct then the uptick in the MIT data suggests that the next readings of CPI will show an uptick as well.

You think the Mit index is going to level out?  I'll bet you a Coke it doesn't.

I have bet more than a Coke that it won't :-)

But note that this has no necessary link to deflation risks: while the next 'total CPI' data will almost certainly show an uptick, the next core CPI readings may or may not show an improvement. The MIT data does not show the 'core MIT' component so it's hard to tell just from the graph linked in this article.

Why no flattening in 'total CPI'? If you check the historic long-term CPI graph I linked to then you'll see that supply & demand bottlenecks in commodities need at least 1-2 years to play out: it takes time to increase supply and it takes time to reduce demand. It's slow, messy, physical, real-life processes, not speculative financial movements that will calm down in a few weeks or months.

The large CPI upswings are followed by large downswings - the core CPI readings generally hardly notice these swings.

This time it might take even more time: 'reducing demand' for food is particularly hard ... humans tend to rest the market option of 'death from starvation'.

Further, with the solar cycle revving up again:

and with the upcoming solar cycle top combined with baseline global warming that the record 2010 heat has shown it does not look good for improved grain harvests and increasing food supply ...

If by QE2 working you mean stopping deflation, then sure.

IMO it's not 'sure' but 'maybe'. Deflation is 'core CPI' not 'CPI', i.e. the slowly downwards trending red line in this graph:

does not necessarily follow from an uptick in CPI (or an uptick in the MIT data).

I find the perpetual confusion between core CPI and CPI here on ZH quite unproductive: their separate meaning is well established - why does ZH continue to report that they are one and the same thing?

If the uptick in the ('total CPI' equivalent) MIT data was mostly due to food and energy then core CPI wont stop trending down. If on the other hand deeper changes have taken place and the labor market (and wages) start improving and 'stickier' prices start moving up as well, then deflation might be less of a risk.

But you think we can just end it and coast?  We're playing the Yodeling Mountain Climber game on Price is Right, and we aren't quitting until we fall off the top.

Whether it's Japanese-style two decades deflation is literally a life and death matter for a lost generation:

With 40% (!) youth unemployment in today's deflating Spain it's a very direct problem IMO.

Note that the QE exit strategy for the Fed is not particularly hard. It is a commonly held belief that the Fed has 'printed trillions' but it's wrong: what it has done it has taken up long-term government debt and allowed the government to convert it to shorter maturities in essence. The natural 'exit strategy' is for the Fed to let those 3-5 year bonds mature - that removes the (QE2) liquidity gradually and automatically. Then the Fed can raise rates, if it wants to.

If you check how the Great Depression played out (we have no other example of US deflation so we've got to analyze that old example) you'll see that for many years the Fed was trapped in ZIRP. It has increased rates in 1937 but that was still too early. So it can take quite some while - but it's not necessarily a period of time without prosperity - the second half of the 1930s was rather productive.

What would be really nice if the MIT people tried to create a 'core MIT' price index - and compared it with the core CPI data.


Fri, 02/11/2011 - 18:20 | 954347 RockyRacoon
RockyRacoon's picture

Krugman again?  You know, I don't recall ever seeing you two in the same place at the same time.   Are you lurking on ZH, Paul?  Come on, fess up.

Fri, 02/11/2011 - 18:33 | 954380 ColonelCooper
ColonelCooper's picture

He can't be Paul.  Paul would never stoop so low as to talk with the likes of me. 

Sat, 02/12/2011 - 04:24 | 955400 More Critical T...
More Critical Thinking Wanted's picture


At least on his blog Krugman appears to be quite approachable. But yeah, the comment influx on his blog is huge, so I guess he cannot spend all day answering them.

He sometimes does pick out individual comments and answers them in upcoming blog posts though.

But I don't know him in person - maybe he is a douchebag. He does not give me that impression in his public communications, while some other public figures like Palin, McCain or (Mrs) Clinton definitely give me that impression: the deep rooted dishonesty in their personalities shines through all their communication attempts to seem approachable.

But it's really hard to tell - one of the strongest traits of sociopaths is to seem compassionate and approachable. Why do you think we have so many compassionate looking politicians? Why do you think is affinity fraud one of the most common starting steps of ponzi schemes?

(OTOH, Krugman specifically criticises and exposes the hypocracy of his own class - not the typical sociopathic pattern of behavior.)


Sat, 02/12/2011 - 11:02 | 955608 The Profit Prophet
The Profit Prophet's picture

Krugman is definitely making the ZH rounds, however, I will need more observations of Mr. Steroid Thinker before officially supporting Rocky's call.....although it's looks very promising based on the writing style and depth of premise contained within the posts.

As evidence of his presence, I provide the following testimony:

A few weeks back I was involved in a back and forth with Cog. Dis. about the inherent nature of Mr. K - when I floated the question of whether Mr. K is in fact "evil" (for using his power and influence to promote a bastardized and highly destructive form of Keynesianism in order to help bring about a Globalist agenda), or was he just too "stupid" to understand  the end game of this practice.  CD replied that he believed Krugman to be a self-interested pawn of the Elite - a premise that Krugman himself would not be able to refute if he was in fact so influenced/entombed.

So here's the crux:  A few days after this banter, Krugman was quoted in an interview in response to a question about his ideology: "Well..I'm pretty sure that I'm not stupid, so I guess that makes me evil"!!!

Coincidence???......I think not!     


Fri, 02/11/2011 - 19:22 | 954497 meizu
meizu's picture

because formula for core CPI was changed


also, it proves that there is no such thing as deflationary spiral because the government can instant reverse price deflation and cause price inflation if it wants to; so even as the government inflates prices, the real estate market continues to collapse and unemploment remains high; During the japanese deflation, the CPI never dropped significantly even as seet values tanked

Sat, 02/12/2011 - 04:54 | 955418 More Critical T...
More Critical Thinking Wanted's picture


because formula for core CPI was changed

It is true that in January 1983 housing prices in the CPI basket were replaced with "owners' equivalent of rent" because rents are more stable metrics of real housing costs. (Housing prices include a lot of speculative/asset prices.)

Note, if we undid that change of the CPI formula and re-ran the numbers then the current rock-bottom housing prices would be showing an even more deflationary core CPI reading.

So yes, the formula was changed, but I do not see how that change supports your position, it actually undermines your argument.

In hindsight it was good that the CPI change was done: this way core CPI did not over-estimate the deflationary effects of housing.

Regarding other changes to the CPI formula, current estimations are that they affected the results by less than 0.3%. Here's a (lengthy ...) analysis of the various changes:

(If you do not trust the analysis BLS you can double check the changes yourself - you'll see that beyond the housing change most of the changes are benign and served the purpose to stabilize (improve the reliability of) the index and to remove sources of systematic skew.)

But IMO the best 'intuitive' evaluation is to go look at all the historic CPI readings yourself:

Do you really believe that there was more than 10% of headline inflation in 2008?

Do the frequent 10%+ readings throughout history really tell you that the government is trying to hide inflation?


Fri, 02/11/2011 - 18:07 | 954308 rosiescenario
rosiescenario's picture

...and QE started after Jackson Hole....Ben was quite taken with the Grand Tetons....looking at their soaring profile gave him an epiphany of sorts, "I wonder if I could ramp the stock market to similar heights?"

Sat, 02/12/2011 - 06:26 | 955450 Zero Govt
Zero Govt's picture

What does the CPI, and BPP figures, actually show you guys?

Does it show you liquidity in the system? Does it show you the footprints of the Fed? Does it show you Bernanke magician-like conjuring the retail index? No. Doh!!

The only friggin thing the CPI and BPP figures show you is retailers adjusting prices. It show's you PRICING POWER. What retailers can price a basket of goods in the retail market, how much they can get away with.

Further it shows you a 5 Oz bag of peanuts has gone up say 5% but it does not show you volume, that consumers might switch to a cheaper (deflationary) range of 'on sale' Brazil nuts.

Don't look at the CPI to gauge inflation/deflation. Look at major retailers. Wal-Mart etc are struggling, their sales are contracting (deflation) and profit margins are being squeezed (deflation) and their share prices are heading downhill because the real pricing pressure is deflationary, its Dog-eat-Dog out there and getting more competitive by the month.

Every Dollar in your pocket is going ever further. Once the Commods' come off their tops it'll be even more obvious all asset classes are deflating along with economic activity. As I've said before you want inflation, you've HAD inflation for 25 years. Game Over. Get ready for deflation like you wouldn't believe!!!

Fri, 02/11/2011 - 16:16 | 953919 Withdrawn Sanction
Withdrawn Sanction's picture

Let's be clear here, that chart shows a (modest) 3% or so decline in the MPP price level during 2008.  Hardly a deflationary spiral.

BB doesn't give a damn about goods price deflation (or his callous remarks about Egyptian unrest make clear).  The only thing he cares about is bank financial assets' price deflation.  He can impede that BFA deflationary process and in so doing make it that much worse.  He cannot, however, stop it.

Fri, 02/11/2011 - 17:33 | 954191 More Critical T...
More Critical Thinking Wanted's picture

The article is missing the point (by ignorance or intentionally), it is confusing "CPI" with "core CPI". In the CPI graph you cannot see the deflationary trend that the Fed got worried about.

Here's a graph of both CPI and "core CPI":

See the red line trending dangerously low in mid 2010, and unprecedented low reading of core CPI values?

That is what got Bernanke worried that the US is facing Japanese style deflation.

Core CPI was not worrisome during 2008 when CPI rose and dropped quickly.

See more here:


Fri, 02/11/2011 - 17:41 | 954218 silver_serf
silver_serf's picture

Dude we come to ZH because we don't like propaganda...

Sat, 02/12/2011 - 10:13 | 955568 bb5
bb5's picture

amen to that

Fri, 02/11/2011 - 19:27 | 954506 meizu
meizu's picture

yet he was able to instantly reverse the modest deflation in prices and send the stock market up 60% in 2 years but still can't stop the collapse of asset prices

Fri, 02/11/2011 - 23:49 | 955098 mark mchugh
mark mchugh's picture

You're retarded, and not just because you link to Krugman.

Remember $147 oil? which became $33 oil a couple months later?

Go pull up a few dozen 5-year commodity charts (corn, oil wheat cotton etc.), most are in major, long term uptrends signaling a serious inflation problem......except for the six month period between june and December of '08 (the deflation scare).  The most blatant example of orchestrated manipulation the world may ever see.

Just 'cause you whizzed yourself, that doesn't mean that deflation was ever a real concern.

Sat, 02/12/2011 - 16:28 | 956141 Zero Govt
Zero Govt's picture

"deflation not ever a real concern" ....what are you, an academic? When your house drops 30% is that not a real deflationary concern?

We all think about economics in some detached national academic economist stylee. We're almost as deluded as academia and the public sector itself, some fuking fantasy land. It's about time we stopped and dealt with economics as it effects us which is in fact precisely how it works.

When your house is losing value, your pensions have lost 20%, you can't sell your car because buyers are drying up and you're worried about job security because 2 families on your street have lost theirs, that's economics 101. Not this Fed and economist BS about M2 and QE2.

So carrots, wheat and pork bellies are up 20%... big deal. When your house, car and pension is down 20% (big ticket items) deflation is hitting you far harder than small ticket items like food and the price of petrol. Deflation is 'winning' the argument, in fact it's overwhelming the debate if you deal with reality and not this academic nonsense on what's happening on the NY SE 


Sat, 02/12/2011 - 19:18 | 956480 mark mchugh
mark mchugh's picture

Carrots wheat and pork bellies being up 20% is a big deal!!

What you observe as "deflation" is the result of millions of people who don't understand the impact of interest rates on leveraged assets.  Here's something you haven't figured out yet:  Houses, like cars are depreciating assets - their value doesn't keep up with inflation.  Never did.  You've come to all the wrong conclusions, because you ignore the impact of 30 years of ever-lower interest rates.

What's worse is that these ignoramuses see no problem with starving others to keep their McMansions that they bought with no money down from going underwater.

I hope to God you're a paid government shill. 

Sat, 02/12/2011 - 21:28 | 956732 More Critical T...
More Critical Thinking Wanted's picture


I hope to God you're a paid government shill.

Why does anyone who disagrees with the far-right crazies get instantly accused of being a 'government shill'? Do you guys never disagree between yourselves, do you never engage in critical thinking? Is it an act of war against your faith if someone questions your views?

Deflation is not just some natural process. It's a rare but very destructive economic phenomenon that is literally killing people:

More than 7 million Americans died due to effects of malnutrition during the Great Depression.

US youth unemployment is already showing very worrying patterns in the US.

If you think that deflation is 'just natural', if you think this should just happen without doing anything against it then your must be a heartless, greedy sociopath.


Fri, 02/11/2011 - 17:33 | 954189 silver_serf
silver_serf's picture

and that would have been bad ? (deflation)  Main street is still deflating..we just get double screwed from QE...see food stamp usage charts

Sat, 02/12/2011 - 06:15 | 955447 Michael
Michael's picture

The results of global cooling are coming in;

"Houston - The cold weather experienced across much of the US in early February made its way deep into Mexico and early reports estimate 80-100 percent crop losses which are having an immediate impact on prices at US grocery stores with more volatility to come.

Wholesale food suppliers have already sent notices to supermarket retailers describing the produce losses in Mexico and the impact shoppers can expect. Sysco sent out a release(pdf) this week stating the early February freeze reached as far south as Los Mochis and south of Culiacan, both located in the state of Sinaloa, along the Gulf of California. The freezing temperatures were the worst the region has seen since 1957."

According to Sysco’s notice sent out this week:
“The early reports are still coming in but most are showing losses of crops in the range of 80 to 100%. Even shade house product was hit by the extremely cold temps. It will take 7-10 days to have a clearer picture frome growers and field supervisors, but these growing regions haven’t had cold like this in over half a century.”

“Supplies of tomatoes, peppers, cucumbers and other vegetables from Mexico will be severely limited until at least March following an early February freeze.”

Jerry Wagner, sales and marketing director for Farmer’s Best, based in Nogales, AZ, said: “The end of February and the first half of March, there will be even worse shortages of product” than during the first part of February, The Packer reports.
Wagner called it “a miracle” if 20 percent of the cucumber crop survives. Yellow, green and grey squash took the biggest hit. “Some plants will come back but the vast majority is lost,” Wagner added.

Sysco called the Mexico freeze an “unprecedented disaster” and noted the volatility of the matter in its release:
“With the series of weather disasters that has occurred in both of these major growing areas we will experience immediate volatile prices, expected limited availability, and mediocre quality at best.”

Fri, 02/11/2011 - 15:37 | 953765 slackrabbit
slackrabbit's picture

Cool...then we all get to play 'FarCry' and 'Just Cause' for real....I bags the sniper rifle and the rocket launcher!!


Fri, 02/11/2011 - 22:04 | 954915 serotonindumptruck
serotonindumptruck's picture

"...nicely situated on their private islands..."

That would be fine with me. Hopefully, the Earth will suffer an event known as pole shift sometime in the next 24 months. The seismic effects should include massive global tsunami, so those bankers won't be cozy for long.

Sat, 02/12/2011 - 09:33 | 955545 ShankyS
ShankyS's picture

And just like the last two bubbles - no one could have predicted it or "could have seen it coming".

Fri, 02/11/2011 - 15:32 | 953740 Sudden Debt
Sudden Debt's picture

Like the Great dictator Mussolini once said:

"Every great conspiracy only holds for 12 years"


we'll see...

Sat, 02/12/2011 - 08:35 | 955503 Triggernometry
Triggernometry's picture

The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth becomes the greatest enemy of the State." 

-- Dr. Joseph Goebbels, Nazi Propaganda Minister

Fri, 02/11/2011 - 15:10 | 953651 MonsterZero
MonsterZero's picture

Zzzzzz let's see a 50 year inflation chart, this 3 year time frame junk is pointless.

Fri, 02/11/2011 - 15:12 | 953658 Tyler Durden
Tyler Durden's picture

Considering QE1 started at the very bottom of that chart, some would disagree completely.

Fri, 02/11/2011 - 15:26 | 953703 packman
packman's picture

Since pretty much every popular gauge uses annual rates of inflation - seems like a chart presenting the data in that form would be appropriate.  There's a chart of that on their page, seems like it should posted also.

MonsterZero - it's not feasible to post a 50-year chart - they just started collecting this data less than 3 years ago.


Fri, 02/11/2011 - 15:28 | 953717 Fred Hayek
Fred Hayek's picture

Apparently, he was buying stuff on the internet in JFK's administration.

Fri, 02/11/2011 - 17:36 | 954200 Mad Max
Mad Max's picture

MonsterZero = Al Gore?

Fri, 02/11/2011 - 18:35 | 954373 slewie the pi-rat
slewie the pi-rat's picture


no way, eminem, too good looking

Fri, 02/11/2011 - 15:29 | 953718 hedgeless_horseman
hedgeless_horseman's picture

What I could really use is a daily chart of expectations of inflation.

Fri, 02/11/2011 - 15:32 | 953737 dark pools of soros
dark pools of soros's picture

you mean they cant go to all those dusty file cabinets, pre-internet, and give him what he wants???

Fri, 02/11/2011 - 18:46 | 954409 Haywood Jablowme
Haywood Jablowme's picture

no, because it all burnt down with the word trade center buildings :)



Fri, 02/11/2011 - 15:32 | 953743 Assetman
Assetman's picture

Actually, the chart gives the benefit of a period of nasty deflation in 2008, that we all pretty much knew existed at the time.

It would have been interesting to compare the MIT broader price index to CPI as prices were ramping into the 2007-08 period.

You know, before we hit the proverbial wall... much the way we appear to be doing now.

Except that GenBen has had us on emergency-like QE and ZIRP for almost 24 months, as opposed to the 5% rates we were seeing at the short end in 2007.

Fri, 02/11/2011 - 15:33 | 953745 Sudden Debt
Sudden Debt's picture

8% since Q1 started sounds about right.


Fri, 02/11/2011 - 18:23 | 954356 RockyRacoon
RockyRacoon's picture

Regardless of past performance, as the saying goes, we are now experiencing price inflation.   This is where the Fed misses the boat.   They always get to this point on any bubble and then go into denial mode.   We are at the critical point where the direction needs to change -- it never has, and it won't now.  Pity.

Fri, 02/11/2011 - 16:23 | 953939 MonsterZero
MonsterZero's picture

It's like RoboTrader posting his stock quotes with a 30 minute run and calling it a trend.  Are these inflation levels something we haven't seen before?  not even close.

Fri, 02/11/2011 - 16:34 | 953967 jus_lite_reading
jus_lite_reading's picture

HOMEWORK for Tyler Durden-

Try and calculate what percentage of the average middle class American's income is spent on food and fuel. My rough estimates are showing 32-38% of total income (15-17% on fuel + 17%-21% on food = 32% min)

And then, please spread the word. Get your ass on Oprah or Dr. Phil and tell AMERICA! NOW!

Fri, 02/11/2011 - 15:19 | 953678 jus_lite_reading
jus_lite_reading's picture

Did you see a silver chart? Gold?

Silver to $45 in a month. There is no way around it. Get back in your hole.

Fri, 02/11/2011 - 15:44 | 953797 Yen Cross
Yen Cross's picture

Good one! Nice catch.

Fri, 02/11/2011 - 16:06 | 953893 Cash_is_Trash
Cash_is_Trash's picture

You mean to tell me that rising asset prices is not a source of wealth???

I have been lied to by my college professors!

I am appalled and want my tuition back with interest, even though the rate is ZIRP.


Fri, 02/11/2011 - 16:45 | 954007 jus_lite_reading
jus_lite_reading's picture

As I said, every man is a Trillionaire, with a castle and a duck in his plate. Win win.

Fri, 02/11/2011 - 15:11 | 953653 ToddGak
ToddGak's picture

Wow...that is looking rather parabolic, no?

Fri, 02/11/2011 - 18:35 | 954387 The Rogue Economist
The Rogue Economist's picture

Seriously parabolic. It looked like a straight jump from about 45' to 75'+. If the second delta holds we'll be approaching near infinity between 89-90' (degrees) in no time.

Fri, 02/11/2011 - 15:12 | 953654 Thomas
Thomas's picture

What I find surprising is that the CPI holds up as well as it does in comparison.

Fri, 02/11/2011 - 15:21 | 953685 Cognitive Dissonance
Cognitive Dissonance's picture

Considering the CPI is adjusted, manipulated and recalibrated on a daily basis, I'm not surprised in the least.

The CPI chart sort of reminds me of Madoff's impossibly consistent returns. Wasn't it just as obvious that Madoff was a shame to anyone who bothered to look? 

Fri, 02/11/2011 - 15:31 | 953734 Fred Hayek
Fred Hayek's picture

My favorite part are the "hedonics" adjustments, the drop in price that they make from the actual numbers because the 2011 model has better features than the 2010 model.  And specifically, my favorite hedonics adjustments are the ones to clothing.  Because a suit in 2011 has soooooo many features that a suit bought in 2010 didn't have.

It's a rigged game. 

Fri, 02/11/2011 - 15:42 | 953789 EscapeKey
EscapeKey's picture

My favourite is the imputations part of GDP. Own your own home? That's the equivalent of you renting the same home, so we add x amount to overall GDP.

It's a fantastic argument, and once the GDP starts dipping, they can start by adding my bed, considering my income would be a lot lower if didn't have one and consequently slept on a stone floor.

Fri, 02/11/2011 - 15:47 | 953810 ColonelCooper
ColonelCooper's picture

Do you have a stone floor? 

Fri, 02/11/2011 - 15:48 | 953818 EscapeKey
EscapeKey's picture

I suppose you will want to add that to imputations as well?

Good point actually, if I had to walk around in mud at home, I might be more likely to fall ill, and consequently my income would be lower as well.

Fri, 02/11/2011 - 16:33 | 953966 ColonelCooper
ColonelCooper's picture

Mostly wondered if you lived in a real life castle with a cool moat and shit.

Fri, 02/11/2011 - 16:37 | 953983 Cthonic
Cthonic's picture

You check out the moat, I'm looking for the rack and iron maiden.

Fri, 02/11/2011 - 17:37 | 954204 Mad Max
Mad Max's picture

I would much rather have some fair maidens with nice racks.

To each his own.

Fri, 02/11/2011 - 19:39 | 954538 andybev01
andybev01's picture


Fri, 02/11/2011 - 18:15 | 954330 ColonelCooper
ColonelCooper's picture

I want to catapult barrels of flaming oil.

Fri, 02/11/2011 - 15:45 | 953806 Cognitive Dissonance
Cognitive Dissonance's picture

Based upon hedonics, I bought my 2010 Camry LE for $3,400 less than my 2003 Camry LE. Too bad the check I stroked was for $4,000 more. I always was a sucker when it came to negotiating with car dealers.

Next time I'll let my 80 plus year old mother negotiate for me. She can't be any worse than me.

Fri, 02/11/2011 - 21:55 | 954897 Fred Hayek
Fred Hayek's picture

Did you try telling the salesmen that they're not selling in accordance with BLS data?

Anyway, straight from the BLS's own site, here are the hedonics adjustments for various categories of goods:

CPI Item Categories that Utilize Hedonic Quality Adjustments

Item Relative Importance December 2009 Men’s Suits, Sport Coats and Outerwear (PDF) 0.130 Men’s Shirts and Sweaters (PDF) 0.231 Men’s Pants and Shorts (PDF) 0.177 Boys’ Apparel (PDF) 0.180 Women’s Outerwear (PDF) 0.136 Women's Dresses (PDF) 0.139 Women's Suits and Separates (PDF) 0.667 Girls' Apparel (PDF) 0.262 Men’s Footwear (PDF) 0.235 Boys' and Girls' Footwear (PDF) 0.153 Women’s Footwear (PDF) 0.333 Educational Books and Supplies (PDF) 0.200 Major Appliances (PDF) 0.176 Televisions (PDF) 0.201 Other Video Equipment (PDF) 0.032

Men's suits, sport coats and outerwear---0.130

Men's shirts and sweaters------------------0.231

Men's Pants and shorts---------------------0.177

Boys' apparel---------------------------------0.180

Women's outerwear--------------------------0.136

Women's Dresses----------------------------0.139

Women's suits and separatees------------0.667

Girls' apparel---------------------------------0.262

Men's Footwear------------------------------0.235

Boys' and Girls' footwear-------------------0.153

Women's footwear---------------------------0.333

Educational Books and Supplies-----------0.200

Major Appliances----------------------------0.176


Other Video Equipment--------------------0.032

This bullshit really only survives through people not knowing about it, through the opacity with which the BLS operates.

Fri, 02/11/2011 - 15:31 | 953738 the rookie cynic
the rookie cynic's picture

The CPI is the modern equivalent of Dr. Pangloss' eternal optimism as satirized by Voltaire in Candide. The CPI, despite all evidence to the contrary, is  "the best of all possible world's" in the mind of Bernankovich. No worries everybody. The bernank can control inflation in 15 minutes afterall.

Fri, 02/11/2011 - 15:43 | 953795 jus_lite_reading
jus_lite_reading's picture

I believe Mark Faber said it best when he said, "He lies! Bernanke is a liar..."

Sat, 02/12/2011 - 16:12 | 956087 MrPalladium
MrPalladium's picture

@Thomas - Bingo!!

This MIT index leads CPI, and given the spike we see, we have advance warning of the kind of news that will likely drive rates higher and cause the stock market to enter a serious correction. We now know what news we need to watch going forward.

I am amused at the faith displayed by "More Critical T" in core CPI - that because it has successfully avoided responding to commodity rallies within a 30 year commodities bear market, the fact that core CPI is ignoring the current commodities rally means the commodities rally is a flash in the pan.

Place your bets!

This MIT index is probably the most valuable trading tool to be posted on zerohedge.

Fri, 02/11/2011 - 15:12 | 953655 thechainrule
thechainrule's picture

Shame Bernanke didnt see this in the alumni email.

Fri, 02/11/2011 - 15:12 | 953657 plocequ1
plocequ1's picture

MIT, Isnt that a College or something?

Fri, 02/11/2011 - 15:28 | 953710 ColonelCooper
ColonelCooper's picture

Yes, but they aren't Princeton so they don't know what they're talking about.  Especially with figures, data, charts, computers etc...

Fri, 02/11/2011 - 15:52 | 953844 binky
binky's picture

Met a guy years ago who bragged about his son going to MIT. Turns out it was the truck driving school in Milford WI.

Fri, 02/11/2011 - 16:25 | 953943 Dr. Acula
Dr. Acula's picture

Did he end up working at the CIA (Cullinary Institute of America)?


Fri, 02/11/2011 - 15:15 | 953661 alien-IQ
alien-IQ's picture

as we approach two solid weeks of a vertical stock market. This is beyond ridiculous.

I don't know if I should puke or scream.

yes I know the obvious answer is to do both...just don't tell me to BTFD cause THERE AIN'T NO FUCKIN DIP!!!!

Fri, 02/11/2011 - 15:21 | 953687 jus_lite_reading
jus_lite_reading's picture

What you should do is buy gold and silver. I spot two trends developing and both indicate silver is about to increase 50% in a month. I could be wrong but I already put my money where my mouth is.

Fri, 02/11/2011 - 15:46 | 953803 jus_lite_reading
jus_lite_reading's picture

And here is the 2:30 PM RALLY to make the sheeple think the economy is recovering... oh so little do they know, the collapse of the global financial system just moved 3 months closer...

Fri, 02/11/2011 - 15:54 | 953853 hambone
hambone's picture

This is the Monday melt up traffic - gotta get up earlier and earlier to beat the rush.

Fri, 02/11/2011 - 16:05 | 953880 alien-IQ
alien-IQ's picture

I'm gonna guess that the /ES will close at yet another multi year high (and HOD naturally) with the aid of a 3:45 rally into the close and further assisted by the $DXY getting shanked down to 78.316.

Let's see if this is as predictable as I'm making it out to be.

Fri, 02/11/2011 - 16:10 | 953898 hambone
hambone's picture

Yeah - I'm cheering for S&P to close on 1332 and double the March '09 low.  Nice test of skill for market masters.  Suggest if it happens, we all should "win" free online Scwhwab trade accounts loaded w/ long and longer investment strategies for our reference (I think Robo and Wanger already got theirs).

Fri, 02/11/2011 - 16:37 | 953980 jus_lite_reading
jus_lite_reading's picture

THIS IS THE RESULT OF GREEN SHOOTS! Just like Jack and beanstalk! UP UP UP!

Fri, 02/11/2011 - 19:29 | 954509 flaunt
flaunt's picture

What are the trends you're following?

Fri, 02/11/2011 - 15:14 | 953662 EscapeKey
EscapeKey's picture

Each horizontal step on that graph is 7 months and some days.

It's a good thing they didn't make the step size 6 months, or it would have been really confusing.

Fri, 02/11/2011 - 16:40 | 953987 Yen Cross
Yen Cross's picture

It's a masonic conspiracy.

Fri, 02/11/2011 - 15:15 | 953663 Jadr
Jadr's picture

I wonder what the government's excuse will be for using sampling and models to determine things such as unemployment and inflation when it becomes possible to track these in near real time and working from a nearly complete data set.

Fri, 02/11/2011 - 15:15 | 953664 butthead
butthead's picture

Smaller packages for higher prices is your future.

Fri, 02/11/2011 - 15:31 | 953715 slewie the pi-rat
slewie the pi-rat's picture

the local spaceway has the new 14 oz ice cream on sale 4 $2.79.  trendy, uPscale brand, sugar.

Fri, 02/11/2011 - 17:20 | 954140 Mach1513
Mach1513's picture

lb of coffee = 12 oz

lb of bacon = 12 oz

"1/2 gallon" ice cream = 48 oz

I am awaiting 10 eggs = 1 doz


Fri, 02/11/2011 - 18:24 | 954358 countryboy42
countryboy42's picture

I am waiting for the change machine to only give three quarters for a dollar.

Fri, 02/11/2011 - 17:45 | 954231 ouchtouch
ouchtouch's picture

Bought Hamburger Helper for the first time in quite a while -- the pasta package was so laughably small I had to weigh it:  3.8 oz. including cellophane.  But the label says 5 servings so everything is ok.

Sat, 02/12/2011 - 15:52 | 956056 Cpl Hicks
Cpl Hicks's picture

Gotta get in lockstep with Michelle O and her war on obesity.

Fri, 02/11/2011 - 18:05 | 954297 aerojet
aerojet's picture

The boxes just can't get that much smaller, it's already ridiculous.

Sat, 02/12/2011 - 00:41 | 955164 GreenSideUp
GreenSideUp's picture


The latest iteration at my house: A favorite at my house, Betty Crocker brownies w/ walnuts.  Used to be about 1" thick in a 13x9 pan.  Now, 13x9 pan is listed only in the fine print.  But my kids baked them in that pan anyway.  They were about 1/4" thick and the consistency of cardboard.  *sigh*

Fri, 04/22/2011 - 18:32 | 1197747 Sunshine n Lollipops
Sunshine n Lollipops's picture

My 80-yr old father was carrying on today about the price of his preciousssss ice cream. He told me it went up to $7.49/half gallon. You shoulda heard him after I pointed out that his half gallon was only 48 ounces. Geez, I thought I was gonna hafta perform CPR.

I mean, c'mon, Benny! Poor man worked his whole life and all he asks for is a simple bowl of yummy frozen goodness after dinner and yer takin all the joy out of it. Damn you, Benny! Damn you to Hell!

Fri, 02/11/2011 - 15:16 | 953669 Racer
Racer's picture

If wages are not going up/flat for the 80% of the population, then they have  no choice but to buy less... like all the rest of the world,

nice recovery Genocidal Benron..... you done the sheeple over well

Fri, 02/11/2011 - 15:23 | 953684 slewie the pi-rat
slewie the pi-rat's picture

fuking tur-keyz.  some conning linguist probably suggested this to the cryp-toes. this won't last;  the PPT will take that redline down b4 the children get punched out.

Fri, 02/11/2011 - 15:22 | 953690 Bam_Man
Bam_Man's picture

There is a lot of truth in the old saying "the cure for higher prices is higher prices".

IMHO, this stagflationary episode is well on its way to ending in a deflationary crash of epic proportions.

Fri, 02/11/2011 - 15:24 | 953696 Hephasteus
Hephasteus's picture

Bernanke says. Read my lips. There is no inflation.

Fri, 02/11/2011 - 15:26 | 953704 Racer
Racer's picture

That will be one of those classic benankeyisms.. sub-prime is well contained sort, to be filed for posterity under most idiotic statements ever spoken

Fri, 02/11/2011 - 15:40 | 953769 slewie the pi-rat
slewie the pi-rat's picture

those mit team-designed robot death matches are awesome, aren't they, heph?  say, you didn't try to hammer down the PMz a few hours ago, didya?

Fri, 02/11/2011 - 15:26 | 953707 topcallingtroll
topcallingtroll's picture

Nobody is going to deny that rising food prices are in our future, but we dont pay much for food here anyway. Check out a slow mom and pop but best prices on bulk foods. Two hundred million new coffee drinkers in the world the next few years will raise prices quite a bit too. Make a fake business card and go frequent restaurant wholesale suppliers.

Fri, 02/11/2011 - 15:33 | 953732 ColonelCooper
ColonelCooper's picture

Their webpage hasn't been updated in a year.  Did Mom-n-Pop croak or what?  Hard to believe their prices haven't changed since 4-2010.

EDIT - My mistake.  Some of their product prices haven't been updated.  Others have.

Sat, 02/12/2011 - 12:45 | 955753 Moe Howard
Moe Howard's picture

Fake business can backfire. I just got a letter trying to collect state taxes on my fake business. I sent them a fake reply.

Fri, 02/11/2011 - 15:30 | 953730 Jason T
Jason T's picture

disintigration of the physical economy coupled with Bernankenstein policy

Fri, 02/11/2011 - 15:33 | 953736 slackrabbit
slackrabbit's picture

The Bernak: 'You know, I'm really getting tired of smart arse's using logic and reason. I look in to my scrying bowl every day, and speak to the spirits weekly. Now who would you bet on? Santa or some code freaks who spent three years doing this for their thesis?' 

Fri, 02/11/2011 - 15:33 | 953744 RobD
RobD's picture

Damn, it looks like the Russians aren't very good at cooking the books like we are.

Fri, 02/11/2011 - 15:36 | 953759 Sudden Debt
Sudden Debt's picture

They actually where.

They where able to trade without premiums on the goods traded in the USSR for all the basics.

Their problem was that they couldn't export without the dollar in the grey zones, and that killed them in the beginning of the 80's, and after 9 years the system collapsed DUE TO A COMMUNICATION ERROR TO THE DDR!!



Fri, 02/11/2011 - 15:36 | 953750 hambone
hambone's picture

Guess it's just the wealth effect - thought I'd refresh myself on market advances from March '09's lows - amazing.

Dow - up 90% ...13% from all time peak

S&P 500 - up 99% ...15% from all time peak

Nasdaq - up 121% ...44% from all time peak

Russell 2000 - up 133% ...4% from all time peak

Now those are some impressive charts...and nice to see them closing in on all time highs.  Very impressive what a little dedication from a printer press can do.

Fri, 02/11/2011 - 15:50 | 953829 jus_lite_reading
jus_lite_reading's picture

Pay no attention to the P/E ratios of 40 and 100x. Ben expects the economy to grow at 10% YoY and the population to grow at 10 million per year. CMG is trading for the year 2050 when the US population is at 500 million.

Fri, 02/11/2011 - 16:01 | 953864 hambone
hambone's picture

A nice "cherry on top" would be to for Sack to close the S&P at 1332...exactly doubling the March '09 low.  Would just be a nice parlor trick to tell his friends bout later tonight over drinks.  Excellent way to show all those foolish bears that this is the new Bull, it's here to stay, and prosperity is upon us.  ENJOY.

Fri, 02/11/2011 - 16:48 | 954013 jus_lite_reading
jus_lite_reading's picture

Ahhhhhh! So close... MUST. CLOSE. OVER. 1332. [splat] "Damnit Tim! I told you not to get that on my yamaka!"

Fri, 02/11/2011 - 17:22 | 954147 hambone
hambone's picture fucked up!?!

Fri, 02/11/2011 - 15:35 | 953753 Hang The Fed
Hang The Fed's picture

Shit like this is bound to bring a popular revolt to this country before too much time passes, unless we've really just become a batch of easily distracted pussies.

Fri, 02/11/2011 - 15:42 | 953788 andybev01
andybev01's picture

*shhhh...* Idol's on.

Fri, 02/11/2011 - 16:09 | 953902 Implicit simplicit
Implicit simplicit's picture

Oh ya, many people thought TBTF was a reality show for people that had to lose wait or die.

Fri, 02/11/2011 - 16:49 | 953975 plocequ1
plocequ1's picture

Do they have Hotdog stands, Wifi and ATMs at rallys? I must be fed. If not, I stay home.

Fri, 02/11/2011 - 15:37 | 953760 Apart from Reality
Apart from Reality's picture

I think I beat you to this story


Fri, 02/11/2011 - 15:39 | 953772 RobotTrader
RobotTrader's picture

Gold and oil not confirming the parabolic price spike.

As long as gold doesn't send any alarm bells, and gasoline prices remain under control, the Sheeple will continue to buy Chipotle burritos, overpriced sandwiches from Panera, iPads, and K-Cup coffee machines from Green Mountain.

Fri, 02/11/2011 - 15:51 | 953837 EscapeKey
EscapeKey's picture

Well, then arguably Blythe Masters does the world a favour by manipulating the price downwards.

Fri, 02/11/2011 - 15:51 | 953838 jus_lite_reading
jus_lite_reading's picture

You are correct. They know this. They know what it takes to keep a population calm while raping them without even a pinch.

Fri, 02/11/2011 - 17:14 | 954111 DonnieD
DonnieD's picture

I always check gold futures before I grab some fast food. Don't want to make a foolish purchase.

Fri, 02/11/2011 - 15:41 | 953780 packman
packman's picture

Quite the jump there over the past month and a half or so.

It'll be interesting to see what the official Janurary CPI numbers look like next week - if they reflect at least some of that big gain (and if they - what will be the Bernank's reaction - will he stick to his QE guns)

Fri, 02/11/2011 - 15:42 | 953784 Josh Randall
Josh Randall's picture

MIT - what do they know, everyone knows the Bernake knows all - havent you people seen the Stock Market lately ? Which acronym do you trust - CNBC or MIT ?

Fri, 02/11/2011 - 15:41 | 953786 Seasmoke
Seasmoke's picture

packages are getting smaller and smaller !!

Fri, 02/11/2011 - 15:45 | 953801 hambone
hambone's picture


Fri, 02/11/2011 - 16:44 | 954002 Cthonic
Cthonic's picture

That's supposed to happen, when it's -28F outside.

Fri, 02/11/2011 - 15:51 | 953836 Misean
Misean's picture

The price surge is gonna hit a wall, as there's no feedback loop to sustain it.

Fri, 02/11/2011 - 17:25 | 954153 Stimulus Billy
Stimulus Billy's picture

Here's some feedback: a zillion Chinese and a Fed sanctified weak dollar.

Fri, 02/11/2011 - 16:04 | 953883 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

So that WTI/Brent oil price difference is getting huge no? $16+ difference per barrel.

Why don't other parts of the world ship in WTI seeing as it's a huge discount?

Another successfully distorted 'market' by that filth the Bernanke.

Fri, 02/11/2011 - 17:01 | 953936 slewie the pi-rat
slewie the pi-rat's picture

they don't wanna risk a mutiny by telling the handful(z) of men and women aboard that they're gonna spend a few daze in the Gulf?

Fri, 02/11/2011 - 16:08 | 953899 cdude
cdude's picture

Markets up as Mubarak quits, Kraft down on outlook

Story headline from Reuters a few minutes ago. Am I the only one who sees the irony in this? Anyone?.....Anyone?

Fri, 02/11/2011 - 16:28 | 953954 oogs66
oogs66's picture

Separate from the prices used in CPI is the question of weightings. Do the ratings reflect the average persons spending? Is it based on anything? If they reweight housing down and food up then we have an inflation problem. Why isn't the actual composition of CPI questioned more???

Fri, 02/11/2011 - 16:32 | 953964 hambone
hambone's picture

LOL - good one...

Fri, 02/11/2011 - 16:56 | 954035 cosmictrainwreck
cosmictrainwreck's picture

well...ya's the same ol' CPI we've been using for a while now... gosh, we'd have to make a lot of bureaucrats actually work, if they wuz gonna go an' re-calculate it...

besides....we might not like the new numbers

Fri, 02/11/2011 - 16:35 | 953977 hangemhigh77
hangemhigh77's picture

I heard the black congressman from Missouri in Ron Pauls committee yesterday say how unemployment was getting better and the economy was getting stronger as wittenessed by the stock market and inflation was below 1%. That guy should have been thrown off that committee  right then and there

Sat, 02/12/2011 - 15:55 | 956066 Cpl Hicks
Cpl Hicks's picture

It's that diversity thing...

Fri, 02/11/2011 - 16:45 | 954003 drB
drB's picture

Has worked in stealing money from people who have earned way of debasing it.
This was a reply to the critical thought about success of QE

Fri, 02/11/2011 - 16:58 | 954051 slewie the pi-rat
slewie the pi-rat's picture

being a luddite, i prefer Commodity Futures Online Trading - Bloomberg 

for a little "insight" into what the US and GB mighta had in mind,  starving the children of zimbabwe:   The Goldsmiths, Part CLXXX  

no one will ever accuse R.D. of being a counterphobe. but i think he usta read OP'z mail, himself, so i understand.  the last time i e'd him, he published my entire fuking e!  b/c he didn't agree w/ one of my pasta-lattes.  i might e him again and say hi:  ever think of tying yer id's into zionism???  but, i think i'll just see how long it will take him, at his own picante pace. 

now, bloomberg doesn't include the CCI, yet, and i hope it is just b/c the meyer of hold new hampsterdamned hasn't heard of it, yet.

finally, slewie has sent his idea for to a child in india to see if he can get it started. 

and even more finally, i'd like 2C those mit guys come up with a black market price index. Hahaha! 

slewie out.

Fri, 02/11/2011 - 17:18 | 954125 Stimulus Billy
Stimulus Billy's picture

Here's my observation.  If it's quality food, it's thru the roof.  You can still find reasonable staples and junk food at Walmart (where I usually go, sigh).  A good steak (somewhere else) will cost a fortune.

Fri, 02/11/2011 - 18:52 | 954429 robertocarlos
robertocarlos's picture

All the best food is probably exported to rich people and NK dictators.

Fri, 02/11/2011 - 18:18 | 954342 ALPO
ALPO's picture

Leave it to MIT

Fri, 02/11/2011 - 19:15 | 954479 Critical Path
Critical Path's picture

Might be too early to tell but what looks alarming is the ROC on the first chart from what appears to be about late December. Taking off a bit higher.  Strike one for the Beard, now what the fuck?

Sat, 02/12/2011 - 00:06 | 955119 socalbeach
socalbeach's picture

Where's Mish?

Sat, 02/12/2011 - 00:25 | 955142 DeadFred
DeadFred's picture

I calculate 10% for the steep rise for the last couple of months.  Not quite hyper-inflation but a good start.  It's always great fun to extrapolate from small bits of the data set.

Sat, 02/12/2011 - 12:39 | 955733 Winston Smith 2009
Winston Smith 2009's picture

One major problem with their index that would cause it to understate real inflation - it can't take into account product quality or portion reductions (like the incredible shrinking "half gallon" of ice cream) that are common during margin compression phases like the one currently in progress.

However, it's still a lot more accurate than the CPI pure BS figure.

Fri, 04/22/2011 - 17:05 | 1197535 AldousHuxley
AldousHuxley's picture

America rewards liars because America is a country full of people who believed the lie about the American Dream.



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