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Today's ISM Prices Paid Number Predicts A 6.2% CPI In 12 Months

Tyler Durden's picture


For all those who looked at today's Priced Paid component of the ISM, and had a very bad feeling about what this signifies for not only corporate margins (one word: shrinkage), but broader inflation, we good news for you: you are absolutely right. A simple regression analysis of Prices Paid to CPI data indicates that the median CPI 12 months following a PP greater than 80 (such as this morning's 81.2) is over 6%! Which of course means that the far more volatile non-core components of the CPI will likely be surging at double digit rates by then. In other words, in one year, based on a simple historical regression, the US will well be on its way to inflation that will even leave the Chinese cowering in shame. And if consumers still refuse to leverage by then, then Al Jazeera will be covering riots (following the FTC's shut down of all US media) from our own back yard. If they do, on the other hand, and with $2 trillion in excess reserves, say hello to the Shazam moment.

John Lohman provides some humorous commentary on this otherwise very sad topic.

I sure am glad Bernanke has that whole “100%” thingy going because otherwise this morning’s ISM report would raise inflation concerns.  The table below compares the ISM’s Prices Paid Index with subsequent changes in the Consumer Price Index since 1950.  I realize that prior points in history may not have had the same levels of excess capacity and slack in the labor market that we currently have…but I’m 100% confident they didn’t have $2.5 trillion floating around either.

But not to worry.  Should inflation actually rise 6.2% over the next 12 months, the San Francisco Fed will exonerate Bernanke with a research paper attributing the entire rise in the CPI to snow.


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Tue, 02/01/2011 - 14:57 | 924532 unwashedmass
unwashedmass's picture


i'm sitting here watching the dollar sink, watching JPM nail the escape hatch of gold closed for anyone who knows what's going on, and its getting damn scary.

isn't there anyone who can stop Bernanke? when does Ron Paul get to grill him?

we're breaking .77

Tue, 02/01/2011 - 15:03 | 924552 Racer
Racer's picture

Bernanke: The man who caused the Greatest Depression in History

Tue, 02/01/2011 - 15:05 | 924566 Cdad
Cdad's picture

Ain't that just a pisser?  It has me feeling mighty disappointed in my government, too.  It has me feeling really pissed off at one J. Dimon who doesn't think I should be bothered by his day in, day out assaults on American wealth because he  needs to move the S&P back to some respectable level determined between him and Ben Bernanke...who is providing all the excess dollars used to destroy dollars.

What a sweet Banana Republic Tree world I will be leaving for my sons to clean up. 

As for where the hell is Ron Paul, exactly.  Where is he?  What is he doing?  Polishing his desk?  So much talk from him that I actually put a little faith there.  I'm still waiting and wondering where he is.  Has he just decided it would be easier to let the Fed destroy itself rather than intervening on the intervener?

Frustration is running my dollar sinks inexorably towards nothing. 

Tue, 02/01/2011 - 15:13 | 924608 tellsometruth
tellsometruth's picture

here is his office number find out for yourself: 202-225-2831


I believe it is Feb, but Ben is not allowed under current rules to be subpoenaed to just the sub com..


Don't be afraid to call your reps office and get answers yourselves

Tue, 02/01/2011 - 16:46 | 925014 duo
duo's picture

The Ben Bernank => The Hose Mubark => end of dollar hegemony

Wed, 02/02/2011 - 00:53 | 926344 captnKrunch
captnKrunch's picture

There it is again.  Could someone please tell a newbie exactly how JPM is manipulating the price of gold and how everyone knows they are?

Tue, 02/01/2011 - 15:02 | 924550 jm
jm's picture

I am saying this out of genuine sympathy for some person that goes by "Phlox". I believe the insane Bastard erroneously singled her out as being me to her collegues.  I am not Phlox, and don't know Phlox.  I am not a journalist. I do value my privacy. 

If "Phlox" did say she was the author of my posts at some point, then she gets her deserts now.  Otherwise she should be left alone. 

Tue, 02/01/2011 - 15:02 | 924551 franzpick
franzpick's picture

PMs, grains, softs, materials XLB and other non-value-added equities all on a tear last hour, having a breakaway look on my screens, and Ben unprepared for his wish coming true and national discontent spreading worldwide and toppling crony leaders.

We are rotating thru our 6 months food, water and supplies FIFO basis, and none of our neighbors or friends know.  Just a few hundred thousand of you.

Tue, 02/01/2011 - 15:05 | 924564 trillionaire
trillionaire's picture

What is the best way to protect yourself against this?  Thoughts?

Tue, 02/01/2011 - 15:07 | 924580 trillionaire
trillionaire's picture

Oh, and has Hugh Hendry addressed inflation lately?  Is he still US Treasuries and Unilever type stocks?

Tue, 02/01/2011 - 15:05 | 924567 HarryWanger
HarryWanger's picture

Which of course means that the far more volatile non-core components of the CPI will likely be surging at double digit rates by then.

That's not correct as this chart is showing CPI numbers INCLUDING food and energy. This chart is not showing core numbers.

Tue, 02/01/2011 - 15:09 | 924590 Tyler Durden
Tyler Durden's picture

So here is a math question (of that type that supposedly should be made redundant by Captcha...but there's an app for everything these days): if Core CPI grows at 2% and has a 50% weighting in CPI, what is the growth rate left for food and energy inflation, also assuming a 50% weighting (keeping it simple).

Tue, 02/01/2011 - 15:16 | 924613 FOC 1183
FOC 1183's picture

i'll take a shot at 10.4, but honestly, i suck at captchas

Tue, 02/01/2011 - 15:20 | 924634 d00daa
d00daa's picture

Wanger?  WANGER???


You don't even understand what TD just posted, do you???


You're getting schooled here.  It is painfully obvious that even simple math is over your overly-enlarged head.  Run on back to Yahoo Finance like a good little bitch.

Tue, 02/01/2011 - 15:20 | 924637 HarryWanger
HarryWanger's picture

Core CPI is at 0.1%, correct? 

Two points: 1) as pointed out the chart above is not reflecting core CPI. Therefore, there can be no double digit percentage point core CPI. The chart is reflecting Headline CPI. 2) Another math question, how to get from 0.1% to 2% core, is an increase of ____? In other words, highly unlikely any time soon.

So based upon the correct view of the chart reflecting Headline CPI, it is likely we will see the Core CPI at 0.2% within four months.

Tue, 02/01/2011 - 15:32 | 924696 Tyler Durden
Tyler Durden's picture

Even better.  So core CPI at 0.4% or whatever in one year. What does that leave for everything else? Hint:

As World Becomes Zimbabwefied, Cotton Futures Surge 17% In One Month

Here's another math question: What is 17% annualized?

Tue, 02/01/2011 - 15:40 | 924723 HarryWanger
HarryWanger's picture

At that point we would see a Headline CPI in the neighborhood of 2.0-2.2%.

Regarding cotton futures surging, you would have made the worst call in the world had you applied that same annualized logic to oil prices in spring '08. Hell, oil should be somewhere around $300/barrel right now, using, of course, your method of annualizing one month into the future.  

Tue, 02/01/2011 - 15:44 | 924743 tellsometruth
tellsometruth's picture

just look for the coordinated collapse of credit and bail dumb dumb, then BUY THE FUCKING DIP!

Tue, 02/01/2011 - 15:45 | 924745 figuringitout
figuringitout's picture

Try 12% in "Volatiles" to reach the 6.2% CPI number for 12 months out.


.50 * 0.2% + x * 0.5 = 6.2 where X is the "Volatile" CPI Growth Rate.

Tue, 02/01/2011 - 16:03 | 924810 Tyler Durden
Tyler Durden's picture

See that's funny. But you forget: Ben Ali was also hoping for a reversion to the mean. And as for 2008, how much money was Ben Bernanke printing on a weekly basis?

Tue, 02/01/2011 - 16:12 | 924854 Former Sheeple
Former Sheeple's picture

TD january Silver sales (sorry if you posted this already, i'm just getting on)


Tue, 02/01/2011 - 16:21 | 924904 spartan117
spartan117's picture

Holy God.

Tue, 02/01/2011 - 23:35 | 926208 StychoKiller
StychoKiller's picture

Yeah, but fortunately, that's only Silver Eagles -- oh wait...

Tue, 02/01/2011 - 16:43 | 925000 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Harry, what happened in the past has no relevance at this point in time. It is water under the bridge. Helicopter Ben is printing now on top of about 2.5 years of prior printing. It is accumulating quickly.

My basic question is are you trying to look stupid? Has your vegan diet finally taken its toll?

Tue, 02/01/2011 - 15:43 | 924736 FOC 1183
FOC 1183's picture

Since Harry's calculator isn't working, we'll help him out.

rounding food & energy weighting to 25% for simplicity:

(0.004 x 75%) + ( X x 25%) = 0.062

X = Food & Energy = 23.6% = unhappy campers

Tue, 02/01/2011 - 16:23 | 924914 tarsubil
tarsubil's picture

This matches my observations of the price of a gallon of milk (up 35% in the last year).


But like the trolls will tell you, that is offset by grandma's house losing value. Grandma is so happy.

Tue, 02/01/2011 - 15:33 | 924704 Misean
Misean's picture

I got a few grand that'll take the other side of that bet. You in?

Tue, 02/01/2011 - 15:09 | 924593 whatz that smell
whatz that smell's picture


snow, bitchez!

Tue, 02/01/2011 - 15:22 | 924643 tellsometruth
tellsometruth's picture

the current snow sh!t storm surly will be used for all involved in the current ponzi markets as an excuse for sh!tty numbers in Q1, and possible the biggest haul in silver ever in a month

Tue, 02/01/2011 - 16:45 | 925007 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Maybe Helicopter Ben and Timmay can drop their pants and sit on that snow. It would be the same shock everyone else feels while at the supermarket.

Tue, 02/01/2011 - 15:05 | 924568 Whats that smell
Whats that smell's picture

 Yahoo teck ticker has H. Davidowitz on again- this guy sees the truth.


Tue, 02/01/2011 - 15:05 | 924572 Robslob
Robslob's picture

So 6 more months of "party on Garth" for the U.S. markets.

Cool...still have time to cash out my IRA before it is confiscated!


Tue, 02/01/2011 - 15:13 | 924609 snowball777
snowball777's picture

Just in time for Bastille quaint!

Tue, 02/01/2011 - 15:24 | 924653 tellsometruth
tellsometruth's picture


Tue, 02/01/2011 - 15:06 | 924573 Oh regional Indian
Oh regional Indian's picture

Non-core items... F2

Food and fuel.

What a joke CPI is. An official 6.2 will mean riots well before 12 months.

anyways, i think it'll be 6.2 in 3 months or less. 

End game times are so rife with potential for massive change.


Tue, 02/01/2011 - 15:10 | 924597 unwashedmass
unwashedmass's picture


i think gas 4.5 lights the fuse. people won't be able to afford to go to work.

Tue, 02/01/2011 - 15:37 | 924717 Oh regional Indian
Oh regional Indian's picture

Yup. unless .giv gives people gas coupons next.

Possible. Anything is possible.


Tue, 02/01/2011 - 17:21 | 925156 pvzh
pvzh's picture

Could they get to the place where riot is matter with these gas prices? It makes little or no impact to riot in the middle of nowhere (aka suburbs).

Tue, 02/01/2011 - 18:43 | 925480 blindfaith
blindfaith's picture

Americans are dummer than...damn I can't thing of anything.

Fear not, the gumermint will change the components in the CPI to reflect the number they want the media to spoon feed Americans.  Since Americans insist on being out of touch, they will buy it hook, line, and sinker.

AND...Americans will do nothing, nothing about anything until everyone is homeless and hungry in the streets...and then I am not sure they will do anything then.

Wed, 02/02/2011 - 00:54 | 926347 sushi
sushi's picture

It will be blamed on the Chinese currency peg and then used as a rationale to attack Iran in order to bring democracy to Malta and prevent near term abortions in Kansas.

Regardless, Ben will continue to print.

Tue, 02/01/2011 - 15:06 | 924574 Circlehook
Circlehook's picture

I think a large enough group with calibrated pitchforks could take care of the problem.  My pitchfork is calibrated to .308!  ;-)

Tue, 02/01/2011 - 15:30 | 924687 tellsometruth
tellsometruth's picture

what do you think would happen if people had a march and open carried (where legal), how would citizens and the police react to eachother... Americans have tons of guns, supposed to help ensure a free society, and yet egypt is succeeding (currently) without them...

Tue, 02/01/2011 - 15:59 | 924796 Circlehook
Circlehook's picture

The ability and right to carry a gun mitigates an oppressive  force.  It's almost like nuclear war.  Mutual destruction can be assured for all.  So, cooler heads prevail.

On the other hand, citizens without guns only invites oppression by those who have them.

The full script in Egypt has yet to play out.  How many of those citizens, do you think, wish they had guns? 

Tue, 02/01/2011 - 17:29 | 925187 MachoMan
MachoMan's picture

What happened to the black panthers?

Tue, 02/01/2011 - 18:51 | 925524 blindfaith
blindfaith's picture

Please...look what happened at Kent State?  You think people have forgotten about that?  I am sure the panthers haven't.

All you gun toting folks will fold like a house of cards when the swat team surrounds your house. 

I would dearly love to hear, read some real intelligent answers and ideas for solutions, not bla bla bla from Clint Eastwood.

Tue, 02/01/2011 - 19:09 | 925573 MachoMan
MachoMan's picture

What?  That the troops fired randomly and ended up hitting people?  None of whom were brandishing firearms at the time?

Under what scenario are there enough security forces in any united states locale that could remotely affect a million man march of gun toting americans?  Even if they called the troops back, what do you think would occur?  Simply put, the security forces are not going to do a damn thing and we know it...  their best chances, at that point, are to play nice with the new leaders and seek a position of authority in the new regime.

I do not avocate violence unless under extreme conditions...  nothing that we are close to...  especially because it is unnecessary to uproot many of the evils that plague us...

Tue, 02/01/2011 - 15:06 | 924575 tellsometruth
tellsometruth's picture

eeek!  Please help warn others...


Even though it may be futile at least say you spoke out...some here could do some good



Tue, 02/01/2011 - 15:08 | 924585 william the bastard
william the bastard's picture

This is the end of QE. Rate ramp just ahead.


Tue, 02/01/2011 - 15:09 | 924587 Johnny Lawrence
Johnny Lawrence's picture

When the market crashes, so too will commodities.  Inflation problem solved.

Tue, 02/01/2011 - 23:40 | 926213 StychoKiller
StychoKiller's picture

Imaginary Equity market(s) prices != REAL commodity prices

Check your premises.

Tue, 02/01/2011 - 15:09 | 924588 Racer
Racer's picture

So much for the trickle down effect  that ZimBenron says it is... I think it looks a bit yellow

Tue, 02/01/2011 - 15:11 | 924598 HarryWanger
HarryWanger's picture

Murbarak news should send oil prices down further and fizzle the "spreading uprisings in the Middle East". 

Tue, 02/01/2011 - 15:12 | 924605 Johnny Lawrence
Johnny Lawrence's picture

You simply can't be a real human being.  I'm convinced this is a joke account.

Tue, 02/01/2011 - 15:18 | 924624 ForWhomTheTollBuilds
ForWhomTheTollBuilds's picture

From Wanger's Psych Report:

Test subject Johnny Lawrence appears to become agitated when confronted with nonsense.  Fascinating!

Tue, 02/01/2011 - 15:21 | 924639 Lincolns Mullet
Lincolns Mullet's picture

His monocle fell off his face in astonishment!

Tue, 02/01/2011 - 15:24 | 924651 FOC 1183
FOC 1183's picture


Tue, 02/01/2011 - 15:25 | 924663 snowball777
snowball777's picture

Definitely fails the Turing Test.

Tue, 02/01/2011 - 23:41 | 926218 StychoKiller
StychoKiller's picture

HarryWanger == Eliza V5.0


Tue, 02/01/2011 - 15:18 | 924625 firstdivision
firstdivision's picture

If this put the markets at ease, why the roll over then?

Tue, 02/01/2011 - 15:19 | 924631 Lincolns Mullet
Lincolns Mullet's picture

Harry has claimed before he is doing some kind of paper on permabears, so I imagine he is purposely inserting his permabull posts into every topic to agitate for his expected negative responses from ZH readers.

To counter this, everyone should resoundingly agree with everything he says.

Tue, 02/01/2011 - 15:20 | 924633 Stoploss
Stoploss's picture

Guess your still working on the math eh?

Tue, 02/01/2011 - 15:50 | 924770 HarryWanger
HarryWanger's picture

No. Actually, what I'm doing right now is watching oil prices fall to down 1.7% as I write.

Tue, 02/01/2011 - 16:06 | 924828 Tyler Durden
Tyler Durden's picture


Tue, 02/01/2011 - 18:54 | 925535 blindfaith
blindfaith's picture

gee Harry stop standing on your head.

Tue, 02/01/2011 - 17:07 | 925097 UninterestedObserver
UninterestedObserver's picture

STFU you stupid fucking idiot.

Tue, 02/01/2011 - 15:11 | 924599 TooBearish
TooBearish's picture

It may IMPLY 6.2 but it will not be REPORTED as 6.2 - quick buy AAPL

Tue, 02/01/2011 - 15:11 | 924600 william the bastard
william the bastard's picture
WSJ Blogs Real Time Brussels

Insight and analysis from The Wall Street Journal and Dow Jones team in Brussels

February 1, 2011, 12:34 PM ET

Should ECB Let German Wages Rip?
Tue, 02/01/2011 - 15:14 | 924610 The Axe
The Axe's picture

The Fed has succeeded in lifting the stock market back to levels before the meltdown. Amazing without financials. Truly amazing.  If you traded against the Fed( that would be me) pain. As Mr. T predicted more pain. If The B man can do this,,,another 1000 points is easy... 

Tue, 02/01/2011 - 17:08 | 925102 UninterestedObserver
UninterestedObserver's picture

LOL another 1000 on the Dow or S&P?

Tue, 02/01/2011 - 15:15 | 924611 FOC 1183
FOC 1183's picture


Tue, 02/01/2011 - 15:15 | 924612 Stoploss
Stoploss's picture

Shouldn't we keep this one on the down low? Why not instead support the "zero inflation" theory, while quietly preparing in the background. The only way to combat this, is to use Ben's weaknesses against him. Aw shit, Mark Zandi just appeared on TV, i have to go puke.. Back in a few...

Tue, 02/01/2011 - 15:20 | 924622 bob_dabolina
bob_dabolina's picture

I can control inflation with the beat of my heart. I have a mood ring that lets me know when inflation starts picking up. I can make inflation go from 60 to 0 in 15 seconds flat.

-Ben Bernanke

I believe him, I believe in him, I want to be in him.

-Harry Wanger

Tue, 02/01/2011 - 15:25 | 924661 Whats that smell
Whats that smell's picture

That's a good one Bob I like it

Tue, 02/01/2011 - 23:44 | 926226 StychoKiller
StychoKiller's picture

Put your faith in the Fed and abide in the Bernank! :>D

Tue, 02/01/2011 - 15:19 | 924626 JP McManus
JP McManus's picture

I need to coin a word like "truthers" or "birthers" to describe people who believe we're actually having a Recovery. 

I'm thinking "Wangers"

Tue, 02/01/2011 - 16:05 | 924820 william the bastard
william the bastard's picture


Tue, 02/01/2011 - 23:45 | 926229 StychoKiller
StychoKiller's picture

Everybody has to believe in something -- I believe I'll have another beer! :>D

Tue, 02/01/2011 - 15:19 | 924630 buzzsaw99
buzzsaw99's picture

The cpi will be whatever they want it to be.

Tue, 02/01/2011 - 15:31 | 924693 snowball777
snowball777's picture

Will be reported as they want? Yes.

But they have zero actual control over it.

We'll use the reports as kindling when they get burned at the stake.

Tue, 02/01/2011 - 15:21 | 924638 LostWages
LostWages's picture

Memo from The Bernank to citizens of US:

You won't have to worry about the inflation coming if you BTFD.  This is my gift to you. Sell at Dow 20,000.

To the poor people: I am working on allowing you to BTFD with your EBT cards so you continue to eat.  We will allow those with EBT cards to buy with 5% margin if you open your account with the Golden Sacks or the JP Morgue.

For those using their mortgage payments to BTFD, I will prolong the foreclosure an extra year.  Send in your mortage coupon and instead of enclosing a payment, just write on it "I'm BTFD".

Tue, 02/01/2011 - 15:33 | 924706 tellsometruth
tellsometruth's picture

hahaha this will never happen, just like we will never monetize our debt rember Ben saying that...

Tue, 02/01/2011 - 15:27 | 924668 topcallingtroll
topcallingtroll's picture

You know in watching this race between.gdp and core there is no better seat than at club zero hedge and of course td is the greatest. However, I would be surprised if the covariance between ism and cpi ( core or total) is all that high. Have you got an R square on that? I am going to hazard a guess that the r square is less than 0.5 meaning that the majority of the variance is explained by other factors. Inflationary pressure currently is lots of smoke so far in the usa but very little fire.for.the average person. However this horse race is exciting!

Tue, 02/01/2011 - 15:28 | 924677 Whats that smell
Whats that smell's picture

Here in Ohio food stamp bennies are on a Chase card. It looks soo upscale!

Tue, 02/01/2011 - 15:33 | 924707 Yardfarmer
Yardfarmer's picture

With the CCI surging to new record highs, the ISM Prices Paid with oil/bbl surging towards $150 is the harbinger of hyper-inflationary consumer prices, VAT and other sundry taxes, and astronomical Au/Ag. Will this bring the sedentary, bubble vision heads into the streets? We doubt these quiescent, passive denizens will anticipate much the preemptive martial lockdown rude awakening in store for the slumbering sheep. The wolf is at the door. Baa! Baa!

Tue, 02/01/2011 - 15:42 | 924733 pragmatic hobo
pragmatic hobo's picture

CPI of 6.2 means BBY will go kaput.

Tue, 02/01/2011 - 16:10 | 924842 topcallingtroll
topcallingtroll's picture

Ive looked at this again. There is a problem with the data set

You are comparing a with.a discontinuous one. And doing a linear regression between the ism data and the average of.a series of observations.of.later.cpi.collapses the cpi variance.and would make.the.covariance look higher than it is

Geometric mean we really need to much of the time cpi inflation is greater than 4 percent or to use. For the pp greater than 80 category there are 108 observations. The actual inflation rate six months after a pp greater than 80 has been as low as 0.5 percent. Instead.of an arithmetic average we many observations are above and below your cutoff. If your cut off.for.comfortable.inflation is 4 percent then count how many of the 108 observations are below 4 percent and.divide by the total number of observations. This.tells you the odds of.cpi being below.four percent at six months. My mobile cant see all 108 data points. I suspect the data is still worrisome. If someone can see.the set.tell many of the 108 observations in the pp greater than 80 category are over four percent and i can tell you.the odds of greater than four percent inflation at six monrhs.from now.

Tue, 02/01/2011 - 16:45 | 925006 FOC 1183
FOC 1183's picture

by my count, 72 of 108 (67%) were above 4% 12 months later.  83 (77%) were above 3%.

Tue, 02/01/2011 - 16:53 | 925050 topcallingtroll
topcallingtroll's picture

Thanks. This still overestimates inflation bevause it doesnt take into account other confounding.variables as well as my.lengthy explanation above. But it is say we have a fifty percent.chance of inflation over 4 percent. is still in this race!

Tue, 02/01/2011 - 16:10 | 924847 dwayne elizando
dwayne elizando's picture

I heard if you grow a beard like Bernanke you will be immune to inflation! True story!

Tue, 02/01/2011 - 23:49 | 926233 StychoKiller
StychoKiller's picture

Beards:  They're not for just keeping your face warm! :>D

Tue, 02/01/2011 - 16:27 | 924927 crzyhun
crzyhun's picture

This is crude I know, but if you just average the columns from 6-12, you can get a peek/sense at the situation we are in.

And yes an arithm vs a geo average will get a different result. I cannot guess the author's preference.

Finally, this maybe moot. But, the really grevious effects are if the PP @ 70, 80, or>80, where in 12 months matters are galloping away.

Shazam indeed!!


Tue, 02/01/2011 - 16:38 | 924971 FOC 1183
FOC 1183's picture

Technically, the data in the table is not regression output.  It is the result simply breaking the Prices Paid Index into the ranges as defined in the first column, and then measuring the subsequent percentage changes in the headline CPI over different time periods (as defined in the first header row).  Then, the median was calculated for each - and that is the data that appears in the body of the table.

Tue, 02/01/2011 - 16:48 | 925023 topcallingtroll
topcallingtroll's picture

A.geo average can tell us the odds of inflation being above or below.a certain number. I want to know.the odds.of greater than four percent inflation. One is 0.5 so it is possible we will see 0.5 percent inflation according series. A 95 percent confidence interval has to be used if you use a arithmetic mean and that wont tell often inflation is be above or below our cutoff of four percent, or whatever i want to know.if avcording to this data.series.there is an 70 percent chance of inflation above.four percent. This will still overestimate inflation to some degree but i know.the.standard deviation of the pp greater than 80 data to tell you how much it overestimates future inflation. They used.a discrete variable, pp greater than 80 and compared it to a continuous.variable, six month cpi so there is a bias toward a high estimate of future inflation which can be corrected by knowing the SD of.the pp greater than 80 and the mean pp greater than 80

Tue, 02/01/2011 - 17:26 | 925177 DonutBoy
DonutBoy's picture

Oh what an entertaining thread!  Lot's of angry people.  There's not going to be any 6.2% CPI's my friends, they aren't going to print that number.  Just like they magically lose 600K people from the list of people "looking for work" to keep the unemployment under 10%. Oddly enough the commodity index fund I invest in has returned 16% in 3 months, but there is no inflation.

The United States is alot like an insolvent company.  The zero-hedger's are the short-sellers. The company's executives will lie cheat and steal to prevent your version of the story from being taken up by the masses.  Many, many people do not want to know what's coming and will happily join them head in sand.  They reject what they see with their own eyes in favor of what they are told on CNBC.


Tue, 02/01/2011 - 17:53 | 925286 Circlehook
Circlehook's picture

Normalcy Bias!  You nailed it!

Tue, 02/01/2011 - 17:57 | 925307 Greater Fool
Greater Fool's picture


Think 6.2% would have to qualify as a significant minority opinion at this point, although swaps are certainly headed that direction.

Tue, 02/01/2011 - 18:03 | 925322 max2205
max2205's picture

They'll never let that # print. Too much fixed payments would go up like SOC SEC and Govt pensions

Tue, 02/01/2011 - 18:46 | 925498 basquiat
basquiat's picture

who says there's 2.5 trillion $ floating around anyway? 

Tue, 02/01/2011 - 18:48 | 925508 basquiat
basquiat's picture

who says there's 2.5 trillion $ floating around anyway? 

Tue, 02/01/2011 - 23:26 | 926186 Everyman
Everyman's picture

I hope someone busts a cap in that idiot's head.

Wed, 02/02/2011 - 01:46 | 926429 tekhneek
tekhneek's picture

meanwhile I keep buying silver.

Wed, 02/02/2011 - 10:23 | 927015 jkruffin
jkruffin's picture

Every American in this country, right now in fact if you haven't done so already, should be writing your Senators and Reps demanding Bernanke be ousted, along with his troll Timmy G.  If this QE mockery continues past what it is now, and it appears that is the plan all along, this country will be finished permanently, with no hope of anything. The QE keeps coming faster and faster.  This is what many of us have been saying for a while now. Even Gross, who was on the bus, sees the inevitable and is making public comments on the lunacy of these FED policies.  These crooked bankers must be stopped or it won't matter what you have invested in, or whether you own silver or gold, or commodities.

These crooks are taking it ALL. If you are lucky enough to have some of the above, they will just create a way to take it from you as they have in the past. The only way to deal with this crisis, is to let these failed businesses fail, and pick up the pieces and move forward. Bernanke is digging a hole that even Jack couldn't get out of with a beanstalk. The worst part of it all, is that he knows it and doesn't give a rats ass. Goldman has his back.

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