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Guest Post: Inflation Since 2000 Is "Not Contained"

Tyler Durden's picture





 

Submitted by Jim Quinn of The Burning Platform blog,

First things first. Losing 39% of your purchasing power over the course of 13 years is criminal. This was purposely created by Greenspan/Bernanke and the Federal Reserve. My annual salary has not gone up by 39% since 2000. Therefore, I’ve lost ground. I’m sure that most Americans have not seen their wages go up by 39% since 2000.

But now we get to the falseness of the data. If the BLS measured CPI as they did in 1990, without all of their hedonistic adjustment crappola, it would exceed 60%. The housing figure of 39% is a pure lie. Even after the housing crash, the Case Shiller Index is 50% higher than it was in 2000. The houses in my neighborhood sell for an 85% higher price than they sold for in 2000. They can’t fake the price of energy, so the 121% increase is real. They can’t manipulate tuition costs, so the 129% increase is real. Are you really paying less for clothes today than you did in 2000? The 68% increase in medical costs isn’t even close to the real increases which are above 100%.

 

 

I wonder where taxes fall in the inflation calculation, because my real estate taxes, sales taxes, income taxes, and the other 50 taxes/fees I pay have gone up dramatically in the last thirteen years. No matter how you cut it, Federal Reserve created inflation slowly but surely destroys the middle class and benefits the ruling class. Ben isn’t working for you. His mandate of stable prices has been disregarded. He does not have it contained.

 


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Wed, 12/04/2013 - 17:45 | Link to Comment nope-1004
nope-1004's picture

100% of Bernanke is not sane.

 

Wed, 12/04/2013 - 17:47 | Link to Comment Tsar Pointless
Tsar Pointless's picture

100% of that comment is correct.

Wed, 12/04/2013 - 17:53 | Link to Comment Clint Liquor
Clint Liquor's picture

But...But....Bob Brinker says he goes to the store everyday and there is no inflation.

Wed, 12/04/2013 - 18:05 | Link to Comment nope-1004
nope-1004's picture

"Current talk of rising food prices and fears of inflation are largely overstated.  Rising food prices in developing nations can largely be attributed to the citizens of those nations seeking more sophisticated diets."

- Bernocchio, 2011

 

If I didn't hear it with my own ears, I would have never guessed a PhD could say something so stupid.

 

Wed, 12/04/2013 - 18:09 | Link to Comment infinity8
infinity8's picture

I think I'm 100%, permanently, flabbergasted. Can I get disability for that?

Wed, 12/04/2013 - 18:12 | Link to Comment Atlas_shrugging
Atlas_shrugging's picture

I'm one of the lucky ones who works for a big company who likes his plan and gets to keep his plan. Renewals are this week and my year-over-year cost increase is 37%. Nope, no inflation here. Thank you fuckers.

Wed, 12/04/2013 - 19:03 | Link to Comment moriarty
moriarty's picture

None of the prol’s are on the streets with pitch forks and torches, so I would contend that Bernanke is doing very well by his masters.

Frog boiling par excellence ;-)

 

Wed, 12/04/2013 - 20:12 | Link to Comment razorthin
razorthin's picture

Oh, so his Ph.D. is in dietetics.

Thu, 12/05/2013 - 00:09 | Link to Comment TheReplacement
TheReplacement's picture

Then you aren't one of those who believes he's doing this on purpose, as if he's continuing to make this mistake for years on end.

Wed, 12/04/2013 - 17:49 | Link to Comment zaphod
zaphod's picture

You can't inflate bitcoin.

Wed, 12/04/2013 - 18:03 | Link to Comment Citxmech
Citxmech's picture

What do you call all the competing crypto-coin upstarts?  All things being equal - they will dilute the pool, just the same. . . 

Wed, 12/04/2013 - 19:53 | Link to Comment Withdrawn Sanction
Withdrawn Sanction's picture

You might want to read Hayek (1976), The Denationalization of Money, or Hayek (1978) The Denationalization of Money:  The Argument Refined.  You can call it a dilution process if you want.  It's more aptly, a selection/weeding out process.

Wed, 12/04/2013 - 20:38 | Link to Comment Citxmech
Citxmech's picture

I think that this is actually one of the reasons why Gold is money and bitcoin is still a big question mark.

If each crypto-currency are basically parallel iterations of the same exact thing - ironically, they become more-or-less fungible across platforms - albeit at different floating rates as each new version is introduced.  

What would then occur are exchanges that allow direct cross-exchange between each crypto-currency as they pop-up.  The result would be a series of arbitrage/speculative binges as each bit-currency floats against each other with holders looking for maximum short-term appreciation.  Basically we're talking about pure speculation based upon nothing other than convertibility and "limited" supply - though competitors could/would be endless.

If there were a true evolutionary weeding-out process - what would the competitive selection criteria be based upon once the functionality test has been met?

Wed, 12/04/2013 - 23:42 | Link to Comment Matt
Matt's picture

Most of the alternate currencies trade at such low volumes, they only trade versus Bitcoin or Litecoin, and many only trade on one exchange, since they are so illiquid. Some of the more prominent ones make it to a big exchange, like btc-e.com, but they get de-listed if their trade volume drops too low, as just happened to TerraCoin (TRC) I believe. 

Wed, 12/04/2013 - 18:23 | Link to Comment max2205
max2205's picture

Dshort is the best website for macro traders

Wed, 12/04/2013 - 18:39 | Link to Comment AGuy
AGuy's picture

"You can't inflate bitcoin."

You can't be certain that will be the case. They might choose to add more blocks beyond the 21 million BTC limit. I think they will need to do this as over time, people will lose thier bitcoins. It lost on a failed hard disk, thumb drive, or there PC is stolen and wiped without the Bitcoins being taken off before the drive is wiped. It probably only going to take a few years before there are too many coins lost and they need to create additional blocks.

 

Wed, 12/04/2013 - 19:10 | Link to Comment seek
seek's picture

Lost coins are deflationary, as is bitcoin itself. There's no financial incentive for the current holders of bitcoin to allow the protocol to be modified to accept more blocks, so it won't happen. A competing currency is far more likely to happen before a fundamental limit in the bitcoin protocol ever would.

Wed, 12/04/2013 - 20:27 | Link to Comment Exponere Mendaces
Exponere Mendaces's picture

A cursory search would prove your "they have to add more bitcons" wrong.

But what am I expecting - actual due diligence from a bunch of fossilized BTC haters?

Wed, 12/04/2013 - 17:52 | Link to Comment edookati
edookati's picture

are you 100% accurate?

Wed, 12/04/2013 - 17:55 | Link to Comment Clowns on Acid
Clowns on Acid's picture

.. and the other 100% is absolutely feckin' immoral.

Wed, 12/04/2013 - 18:12 | Link to Comment XAU XAG
XAU XAG's picture

Hood Robin

 

Take from the poor and give it to the Rich that what all thease MFERS are

Hood Robins

 

They all need De-Hooding!

Wed, 12/04/2013 - 17:51 | Link to Comment Never One Roach
Never One Roach's picture

My health insurance premium was $3,750/yr in 2002. Now [with the same deductible, benefits, etc] it is over $12,000!

Wed, 12/04/2013 - 18:45 | Link to Comment AGuy
AGuy's picture

"My health insurance premium was $3,750/yr in 2002. Now [with the same deductible, benefits, etc] it is over $12,000!"

You need to look at the bright side of this. Your much higher premiums are going to be put to good use. Think of the poor cronies that can barely afford a yacht, can now use your {strike]premiums{/strike] donations to build themself a real one! /Sarc

 

 

Wed, 12/04/2013 - 17:51 | Link to Comment Yen Cross
Yen Cross's picture

   That medical care component is about to go through the roof.

  Blog: Healthcare.gov can't calculate subsidies, so will pay insurance companies whatever they ask for

Wed, 12/04/2013 - 19:11 | Link to Comment seek
seek's picture

Jesus.

It's like they're moving the defense contractor model over to healthcare. What a complete clusterfuck ACA is.

Wed, 12/04/2013 - 17:56 | Link to Comment Marc To Market
Marc To Market's picture

precisely how inflation helps what you call the ruling class is not immediately clear to me.  Inflation helps debtors over creditors.  Ruling class, what ever that is, tend to be creditors, no ?  You may call hedonistic adjustments crappola, what ever that means, but one cannot simply ignore technology advances because it doesn't fit the story you want to tell.  A cell phone today, or a computer, or a car is dramatically different than it was 10 or 20 years ago.   Inflation an increase in the general price level, not relative prices and all prices are not equal and should not be weighted equally in the basket of goods.  Moreover, the Fed does not say the core rate is only measure of inflation it looks at, but that headline inflation has in modern America moved toward core inflation over time, rather than the other way around.  But of course here at ZH you are preaching to the converted.  Many generally accept you fallacious conclusions and arguments.  Hence no push back against the sloppy thinking.  

Wed, 12/04/2013 - 18:07 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Name one society/currency that has collapsed because their purchasing power became too strong.

Create all the credits you want "mark to fantasy", the calories required to actually do anything or create anything of real value are what they are.

Perhaps I can interest you in a financial "product" of mass destruction?  Any financial advisor making such comments on a "fringe blog" must be pretty pathetic.

LMFAO!!!!

Wed, 12/04/2013 - 18:12 | Link to Comment Ghordius
Ghordius's picture

I can list a number of european PMs who were utterly convinced that a too high purchasing power of the national currency would collapse their chances of getting reelected

Wed, 12/04/2013 - 18:46 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Ha!  Only to lose their heads later.  Good one Ghodius!

Wed, 12/04/2013 - 18:19 | Link to Comment fonzannoon
fonzannoon's picture

Marc how has technological advancements lowered my real estate taxes, my healthcare costs, my childs educational costs, my utility bills, my gasoline costs, food costs and god forbid I ever take my family on vacation, airline etc. costs. While at the same time any savings I had not in the market is paying me 0%.

Technology does not really help too much with the majority of my expenditures.

While all those costs are rising for everyone wages are falling. Nice combination. But hey that laptop I need every 5 years is not that expensive. So I have that going for me. As long as it does not freeze up in which case the geek squad wants $200 just to look at it.

Wed, 12/04/2013 - 19:04 | Link to Comment artless
artless's picture

fonz / rodgerleanne / et al.

I'm with you guys here but just wanted to add a little piece that drives it home. Having read your past posts I think this is econ 101 to you and everyone else but marc to idiocy I think missed that day.

Technological advances by definition are deflationary. Of course that is in the metaphorical vaccum or in other words without the market interventions of gov't and central banks, etc. Your inexpensive laptop and many other tech that was extrodinarily more expensive just a few years back when they were less advanced even is one of the better examples of this. Of course THAT market is missing the interventions that things like energy, education, food, and most of all "healthcare" have woven in to their respective "markets". Even in an economy flooded with way too much credit and cash "tech" prices continue to decrease. That says a lot ot the power of competition or an unfettered market at least. Imagine that in sectors like medicine, energy, etc. It is probably the sole reason why food prices have not surged even more than they have. Lat time I checked it's a pretty competitive market. And last time I checked it's a whole lot more of a necessity than "health care".

I guess I should have put this repsonse to mark to whatever but oh well there it is.

Wed, 12/04/2013 - 19:09 | Link to Comment fonzannoon
fonzannoon's picture

these ridiculous inflation debates remind me of this.

http://www.youtube.com/watch?v=eGDBR2L5kzI

Wed, 12/04/2013 - 19:30 | Link to Comment Pareto
Pareto's picture

+1000 Fonz.  hehe  fucking priceless!

Wed, 12/04/2013 - 19:34 | Link to Comment LawsofPhysics
LawsofPhysics's picture

"Technological advances by definition are deflationary." - Bullshit.  It takes a lot of capital and sometimes many employees to discover, develop, and bring that technology to market.  If your statement were true then the Bay Area in California would be the most deflationary place on earth.  Try again.

Technology requires a tremendous amount of capital and resource consumption, just to develop.

Technology can be "deflationary" when the resources for such activies are available for consumption.  The planet now has 7+ billion (and growing), which requires a tremendous amount of capital and resource consumption, simply to maintain, much less develop those fusion reactors we so desparately need.

Thu, 12/05/2013 - 06:34 | Link to Comment Tapeworm
Tapeworm's picture

Fusion reactors will never be an answer even if they worked. The fuel cycle is impossible. Look it up.

Wed, 12/04/2013 - 18:33 | Link to Comment 25or6to4
25or6to4's picture

I need neither cell phones or computing power to either get to work or have a roof over my head. What an unbielivably stupid arguement put forth by you M to M.My personal economics are not subject to the same accounting wizardry magic as the government finances are.

Wed, 12/04/2013 - 18:33 | Link to Comment rodgerleanne
rodgerleanne's picture

Hello Marc to Market:  My car is 13 years old and has 235,000 miles on it.  I don't buy one every year.  My laptop is four years old.  I don't buy one every year.  My cell phone was 5 years old before I bought a used one from amazon.  I don't buy a new one every year.  However, I do eat food every day!  I do have one drink every day.  I do heat my house every day. 

My personal experience tells me inflation is much higher than my lying government tells me.

Wed, 12/04/2013 - 19:06 | Link to Comment Pareto
Pareto's picture

Hedonics seeks an objective measure that is consistent over baskets of goods over time.  Rothbard (77), "Towards a Reconstruction of Utility and Wlefare Economics" made short work of trying to establish an objective measure of utility (because of aggregation and becuase of the cardinal utility problem) - afterall, utility is an expression of satisfaction arriving from choice over the knowledge of alternatives, SUBJECT TO INCOME constraints.  Moreover, marginal utility and indifference curve analysis is rather hokey since if, as Rothbard points out, "a person is truly indifferent between two alternatives, then by definition, he cannot and will not choose between them."  So much for the "happiness" measuring rod of hedonics.  Besides as Mises argued: "All methods suggested for a measurement of the changes in the monetary unit’s purchasing power are more or less unwittingly founded on the illusory image of an eternal and immutable being who determines by the application of an immutable standard the quantity of satisfaction which a unit of money conveys to him. It is a poor justification of this ill-thought idea that what is wanted is merely to measure changes in the purchasing power of money."  General prices and expressions of utility are all relative, subject to income and demonstrated only through choice.  You cannot objectify utility from indifference.  Utility or happiness is strictly a function of choice.  Don't know why utilitarians can't get past this.

Wed, 12/04/2013 - 18:59 | Link to Comment ncdirtdigger
ncdirtdigger's picture

Just to help you figure out how inflation serves the 'ruling class'.

Who gets their hands on the newly created fiat first? The ruling class.
Who then gets to use that fiat to make purchases/investments before the effects of inflation raise asset prices? The ruling class.

Talk about sloppy thinking. First you have to have the ability to think. Give it a try sometime.

Thu, 12/05/2013 - 01:14 | Link to Comment Kobe Beef
Kobe Beef's picture

How does inflation help the ruling class?

Simple. You have the mice running the maze faster and faster for an ever shrinking piece of cheese. At the end of the day, they have neither the time, energy, nor cheese enough to remove themselves from the experiment. The subjects will never escape, their offspring are born into it, and acting as the experimenter, the ruling class can re-orient the maze, stimuli, elicited responses, and rewards as they see fit.

Want to understand the nature of societal control? Read BF Skinner & John Calhoun. To understand the illusions designed to keep the mice from seeing the maze, there's Edward Bernays.

Wed, 12/04/2013 - 19:01 | Link to Comment skipjack
skipjack's picture

Let them eat iPads, right ?

Wed, 12/04/2013 - 19:10 | Link to Comment artless
artless's picture

Dude, you're a moron.

Inlfation is the increase of the money supply. Price increases are a SYMPTOM.

Tech advances by definition are pricewise (or cost depending on what you're looking at) deflationary. Econ 101. Go back to school.

Wed, 12/04/2013 - 19:19 | Link to Comment LawsofPhysics
LawsofPhysics's picture

I'll only add that "Prices" are fucking irrelevant when there is no mechanism for true price discovery.  See my comment above about technology development.  Definitely NOT "deflationary" in the current world.

Wed, 12/04/2013 - 19:54 | Link to Comment Quantum Nucleonics
Quantum Nucleonics's picture

Inflation hurts everyone, however, it hurts the poor disproportionately to the wealthy.  Here's how.  The "wealthy" (whatever that means) are not creditors, per se, they are asset owners.  Physical assets, real estate, stocks, gold, art, whatever, tend to rise in value with inflation.  Some asset classes hold value better than others.  The wealthy derive their income from these assets.  Inflation erodes the income, but they still have the assets and the income tends to adjust for inflation overtime.  For example, the rent from real estate adjusts up to the current, inflation-adjusted market rate at the end of the lease term.

In contrast, the "poor" (again, whatever that means) tend not to have any assets.  Their income comes from their labor.  Inflation erodes the income of the poor very rapidly.  Where a wealthy person might have to put off buying a car or taking a vacation due to the effect of inflation on their income, a poor person will pretty quickly need to make decisions between eating and staying warm.

Wed, 12/04/2013 - 21:45 | Link to Comment akak
akak's picture

MarcToMarket, fuck you.

Perhaps in your profound ignorance you fail to grasp how "inflation helps what you call the ruling class", but the simple fact is, as history has proven COUNTLESS times, that those in power WILL ALWAYS chose to debase the currency when faced with chronic funding shortfalls and deficit spending.  ALWAYS.  There are no exceptions to this iron-clad rule.

As for your disingenuous lies about technological advances and their impact on CPI, one might as well argue that CPI should fall with falling airfares and cruise ship charges.  But it does not, because those items ARE NOT NECESSARY TO SURVIVAL, and hence not a real part of "the cost of living".  I have a personal computer (now 11 years old), but do not have, never have had, do not want, and NEVER will have all the electronic gizmos and gadgets that all you consumerist sheep and trend-sucking adult children simply "must have".  They would only SUBTRACT from the quality of my life, not add to it.

Anyone, even a child, with the slightest trace of objectivity and honesty knows that the government-calculated inflation rate is nothing but an insulting pack of lies and ridiculous propaganda.  The fact that so many Americans, including you, blindly swallow it hook, line and sinker is a damning indictment of our educational system failing completely to teach even the rudiments of critical thinking, as well as the increasingly debased moral and intellectual fabric of this nation.

May you rot in Hell for siding with the sociopaths.

Wed, 12/04/2013 - 22:27 | Link to Comment fonzannoon
fonzannoon's picture

Dammit Akak why do you always have to say what I try to say much better than I ever could?

Wed, 12/04/2013 - 22:34 | Link to Comment akak
akak's picture

Sorry fonz --- you've got first dibs on the next character assassination of the next Leo wannabe, I promise.

Wed, 12/04/2013 - 22:40 | Link to Comment fonzannoon
fonzannoon's picture

I mean WTF? He is a contributor on here and he stops in for a drive by oligarch slobbering BJ?

Wed, 12/04/2013 - 22:51 | Link to Comment akak
akak's picture

Oh, Marc has had a number of other similarly and implicitly pro-Establishment articles here on ZH before this one, and been similarly lambasted and pinned to the mat over them, but none very recently that I can recall.

Wed, 12/04/2013 - 22:55 | Link to Comment fonzannoon
fonzannoon's picture

This is why I stick to Chris Whalen. It's harder to notice when he is hanging from Jamie Dimon's shlong.

Wed, 12/04/2013 - 23:07 | Link to Comment akak
akak's picture

Fonz, thank you not at all for that distressingly graphic and most unwelcome imagery.

;-)

Wed, 12/04/2013 - 23:46 | Link to Comment Greenskeeper_Carl
Greenskeeper_Carl's picture

I was gonna say the exact same thing. Think ill be skipping over his posts from now on. What an ignorant statement. And I've really come to like Jim Quinn, one of my favorite contributors. So long M2M.

Wed, 12/04/2013 - 23:15 | Link to Comment 25or6to4
25or6to4's picture

@ aka
If I could give you a million up arrows I would. Hats off to you mate!

Wed, 12/04/2013 - 23:23 | Link to Comment akak
akak's picture

Thank you, Chicago fan.

Wed, 12/04/2013 - 17:54 | Link to Comment icanhasbailout
icanhasbailout's picture

Bernanke will defend his thesis unto the gallows.

Wed, 12/04/2013 - 18:12 | Link to Comment Winston Churchill
Winston Churchill's picture

Soon please.

Wed, 12/04/2013 - 17:56 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

But....but....but that's only 3% per year. And even less if you figure compounding. So what's the big deal?

<I thought prices going up was normal, natural and God given.>

/sarc

Wed, 12/04/2013 - 17:59 | Link to Comment Colonel Klink
Colonel Klink's picture

Get to work Mr. Chairsatan, it should only take you 15 minutes!

Wed, 12/04/2013 - 17:59 | Link to Comment LawsofPhysics
LawsofPhysics's picture

What about healthcare?

Roll the motherfucking guillotines, nothing changes otherwise.

hedge accordingly.

Wed, 12/04/2013 - 18:01 | Link to Comment NoWayJose
NoWayJose's picture

I remain baffled at how the anal-ysts can tout a recovery in home prices, while at the same time the Fed is telling us there is no inflation.  Shouldn't home prices be a big part of any inflation measurement - especially since they already disregard food and energy???  Obamacare passed because health care coverage is supposed to be increasing beyond the ability of the public to 'afford' it.  What's left to measure -- iPad prices???

Wed, 12/04/2013 - 18:14 | Link to Comment negative rates
negative rates's picture

When those guys talk of inflation, they mean someone else's buryed gold that they can't get to, but they can leverage in an etf and take orders as if it were in hand, 24k, shiny gold metal.

Wed, 12/04/2013 - 18:03 | Link to Comment Ribeye
Ribeye's picture

Dont worry, us dopey furriners will continue to buy Ameriacas yummy inflation for as long as the mighty Dollar is the global reserve currency......and that's not likely to change anytime soon.......

WAIT.......WHAAAAAAT?

Wed, 12/04/2013 - 18:08 | Link to Comment Magnix
Magnix's picture

My salary went up to $75K from $50K within 10 years and my buying power is STILL low and slow.

Wed, 12/04/2013 - 18:29 | Link to Comment Teddy Tenpole
Teddy Tenpole's picture

 

 

So the old adage holds true, "an ounce of gold should buy you a fine suit".  Why did you douche bags recommend gold again?

Thu, 12/05/2013 - 00:32 | Link to Comment darteaus
darteaus's picture

Maybe they sell suits?

Wed, 12/04/2013 - 18:43 | Link to Comment Silversinner
Silversinner's picture

Gold and silver has gone up a lot more than these bogus figures,

since 2000.Lucky me.

Gold manipulation nothing more then a BEARTRAP.

LMFA and buying hand over fist all the way down.

 

Wed, 12/04/2013 - 18:44 | Link to Comment skank
Wed, 12/04/2013 - 18:51 | Link to Comment OneTinSoldier66
OneTinSoldier66's picture

We all need BenYellin and other Central Bankers of the world to keep inflating the supply of money, otherwise the world will go broke. Let them keep printing and soon we'll all be wealthy. Everyone knows that inflation in the supply of money leads to falling prices of goods and services!

 

The Banker in me says, I'm so happy that a good deal of the cheap easy ctrl+p money that I toiled so hard for, goes into my and my bought and paid for politician's pockets. Here, let me throw you guys some crumbs. After all, we bankers wouldn't want to let you welfare recipients to feel left out.

 

All TBTF and Libor Bankers, and especially Central Bankers, deserve a million dollar bonus for Christmas!

/sarc

Wed, 12/04/2013 - 19:08 | Link to Comment skank
Wed, 12/04/2013 - 19:18 | Link to Comment Wyatt Junker
Wyatt Junker's picture

So... from the charts we can say that there's a bubble in energy, college tuition and medicine.

Just go long War, Plague and Abortion and you'll be fine. 

Wed, 12/04/2013 - 19:20 | Link to Comment Wyatt Junker
Wyatt Junker's picture

Maybe that's why the Left loves abortion.  They're really fiscal conservatives. 

Long Obamacare.

Wed, 12/04/2013 - 19:33 | Link to Comment Tsar Pointless
Tsar Pointless's picture

Yes, in a serious reply, that's why *I* love abortion. The less people, the better, in every way.

Wed, 12/04/2013 - 19:43 | Link to Comment bubblemania
bubblemania's picture

There is no inflation, there is only Yellank.

Wed, 12/04/2013 - 20:01 | Link to Comment Inflation Guy
Inflation Guy's picture

Ah yes, the usual gibberish from people who haven't spent even ten minutes, much less ten years, understanding the CPI. At least he didn't quote the idiots at Shadowstats.

Yes, apparel prices are down (stating his surprise at that fact doesn't change it).

The hedonic adjustments, as anyone who even bothers to look it up can tell you, adds and subtracts nothing on net from the CPI because housing inflation is increased by hedonic adjustment (the housing stock ages) while other categories are decreased (computers, etc).

You can look at my post today about the effect of Obamacare on measured medical care inflation to learn a bit about how medical care is measured, but again the simply asserts a number "above 100%" without proof that his way is right or better.

He makes the usual mistake of conflating the asset price increase of housing with the consumption cost increase of housing. And so on.

Taxes, of course, are not consumption...so why should they be in a price index of consumer goods?

At least the BLS has a methodology, which is public and replicated by non-governmental sources like the Billion Prices Project. There are behavioral reasons why we feel inflation to be higher than it actually is (see my paper in the NBER journal here for some of these). Crying about it doesn't change the facts.

None of the foregoing should imply that I support the cavalier actions of the Greenspan and Bernanke Fed. Although I was long and loudly of the opinion in the mid-00s that inflation would stay low for a long time, it wasn't due to the actions of the Fed. That string has run out, and I believe inflation is going to head higher and possibly ruinously so. Let's hope not. But in making that assessment, I have spent a whole lot of years actually understanding the phenomenon. It would be nice if more people who wrote about (and offered investments related to) inflation did the same, rather than just shrieking shrilly that there is a grand conspiracy.

Thu, 12/05/2013 - 00:29 | Link to Comment darteaus
darteaus's picture

>Ah yes, the usual gibberish from people who haven't spent even ten minutes, much less ten years, >understanding the CPI. At least he didn't quote the idiots at Shadowstats.

The ad hominum opening.  [A bit standard.]


>Yes, apparel prices are down (stating his surprise at that fact doesn't change it).

A straw dog about an undisupted point with an ad hominum chaser.  [Well played!]


>The hedonic adjustments, as anyone who even bothers to look it up can tell you, adds and subtracts nothing on net from >the  CPI because housing inflation is increased by hedonic adjustment (the housing stock ages) while other categories are >decreased (computers, etc).

Address the hedonic with obfuscation and an unsupported allegation.  [Good: Establish your faux intellect, but don't get bogged down]


>You can look at my post today about the effect of Obamacare on measured medical care inflation to learn a bit about how >medical care is measured, but again the simply asserts a number "above 100%" without proof that his way is right or >better.

Direct the reader to a linked article and criticize the lack of proof.  [BLUNDER!  The linked article contains many assertions, but only one "reference"-a "...boutique consulting and investment management company...".  That's a proof source?!  You're guilty of your own criticism!  Finally, one of the linked article's many unattributed assertions: "...the ACA was already having an impact on holding down medical care prices prior to its implementation" BWA-HAHAHA.  Tell that to all the people getting their premiums and deductables raised.  POSSIBLE OUT: Most readers won't click to the link - you're still IN THE GAME!]


>He makes the usual mistake of conflating the asset price increase of housing with the consumption cost increase of housing. >And so on.

Assert mistakes w/o proof, and end with the smug, all-knowing 'And so on.'  [You're trying to close to early.  At least you didn't go with a 'racist' or 'homophobe' card.]


 >Taxes, of course, are not consumption...so why should they be in a price index of consumer goods?

Question the argument with a reasonable tone.  [Nice sleight of hand.  Many readers, however, know that you can only spend take home, so you'll lose them, but you'll pick up some low information readers.]


>At least the BLS has a methodology, which is public and replicated by non-governmental sources like the Billion Prices >Project. There are behavioral reasons why we feel inflation to be higher than it actually is (see my paper in the NBER >journal here for some of these). Crying about it doesn't change the facts.

State the undisputed obvious as straw man, self promote a highly academic article and finish with an ad hominum.  [Nice recovery!  A little harsh with the 'Crying' remark.  Try something more sympathetic: 'I don't like it either...'  Again, many who earn more than minimum wage, pay taxes, buy food and gas, pay for kid's braces and tuition, etc. KNOW that inflation is higher than 2-3%, so, again, you'll lose those folks.]


>None of the foregoing should imply that I support the cavalier actions of the Greenspan and Bernanke Fed. Although I was >long and loudly of the opinion in the mid-00s that inflation would stay low for a long time, it wasn't due to the actions of the >Fed. That string has run out, and I believe inflation is going to head higher and possibly ruinously so. Let's hope not. But in >making that assessment, I have spent a whole lot of years actually understanding the phenomenon. It would be nice if >more people who wrote about (and offered investments related to) inflation did the same, rather than just shrieking shrilly >that there is a grand conspiracy.

Back off the confrontational to establish the reasonable facade,  try to establish common ground with assertions, proclaim credentials and understanding, pray for others with your reasonableness and close with an ad hominum.  [Standard close - I was expecting a bit more.  The article was not 'shrieking', nor was it 'shrill' and it did not assert or imply a 'conspiracy'-especially not a 'grand conspiracy'.  Suggested improvements: Leave out the ad hominums-it makes you look petty; skip the self-promotion-it makes you look petty, again; finally, never, NEVER overreach in the conclusion!!  It completely discredits your effort!

Grade: B+, but for the DISASTEROUS conclusion overreach.  Final Grade: B- (BARELY!)]

 

Thu, 12/05/2013 - 03:38 | Link to Comment akak
akak's picture

Wow!

I've called out some rather egregiously dishonest and/or illogical and/or disingenuous posters in my time here on ZH, but NEVER have I seen one responded to in such a thorough and witheringly effective manner!  Bravo!

Thu, 12/05/2013 - 08:01 | Link to Comment SmallerGovNow2
SmallerGovNow2's picture

well played dart, well played indeed...

Wed, 12/04/2013 - 20:24 | Link to Comment White Owl
White Owl's picture

Fine and dandy, people. But if you go by realistic inflation formulae (i.e., the Reagan 1986 formula, such as is published at Shadowstats.com) since 2000....... then you find out the year 2000 FRN fiat paper trash is now worth about 12 cents of equivalent purchasing power in 2013. No wonder they have to print moar FRN's.

Of course, Wally World, et al, selling much smaller boxes of food and cereal at the same price as the year 2000 has nothing to do with government official "inflation" (sic).  It's just our imagination.

What a fustercluck world we live in where an author like George Orwell had more insight, decades ago, than 99% of the sheeple do today.

As someone who is paying from my self-earned non-employer matched retirement funds to put two children through college (I married and had my first child at age 40), all I can say is I've been raped and beaten enough the past 4 years so that old friends can't even recognize me any more.

Wed, 12/04/2013 - 23:17 | Link to Comment darteaus
darteaus's picture

Shut up and work faster you greedy 1%er.  I need my EBT maxed up to get a 50" for Get-Mas.

Wed, 12/04/2013 - 20:27 | Link to Comment OneTinSoldier66
OneTinSoldier66's picture

"I have spent a whole lot of years actually understanding the phenomenon."

 

If it takes years to understand how money works, then I believe that something is wrong with that money system.

Wed, 12/04/2013 - 20:45 | Link to Comment starman
starman's picture

I've been preaching this for a year but people look at me like I'm whacked?!

Wed, 12/04/2013 - 21:48 | Link to Comment akak
akak's picture

Hey, as long as I can still buy Orly's $0.99/lb chicken breasts (magically the same price since 1982), then of course there is no inflation. 

And besides, as the pigman avatar guy (JimmyJames?) used to tell us, "constant inflation-adjusted prices prove that there is no inflation".

Right?

 

PS: Make me laugh.

Thu, 12/05/2013 - 05:15 | Link to Comment mkhs
mkhs's picture

Oddly enough, the mythical $0.99 chicken breasts are back this week.

http://staterbros.com/TopMenu/Weekly-Ad.aspx

Thu, 12/05/2013 - 15:31 | Link to Comment akak
akak's picture

I wouldn't have believed it if I hadn't seen it with my own eyes, mkhs.  Although to be fair, that is obviously just a brief special price and a one-week "loss leader", and NOT the normal price for chicken breasts by any means, as Orly dishonestly tries to imply.

Fri, 12/06/2013 - 01:19 | Link to Comment mkhs
mkhs's picture

Yes and no.  Here, there are 5 major supermarket chains in walking distance.  Competition is good.  Everything else is up, but chicken is steady.

Thu, 12/05/2013 - 00:35 | Link to Comment JR
JR's picture

“You are a slow learner, Winston."
"How can I help it? How can I help but see what is in front of my eyes? Two and two are four."
"Sometimes, Winston. Sometimes they are five. Sometimes they are three. Sometimes they are all of them at once. You must try harder. It is not easy to become sane.”
? George Orwell, 1984

We don’t live in Orwell’s Oceania; and it’s not 1984. But like Orwell’s Winston, we are living the lie. And our lie is inflation.

Thank goodness for Quinn!

No one except savers blinked an eye when Gluskin Sheff economist David Rosenberg agreed that the Fed should target and rob savers with ZIRP, i.e., the prime source of sound money and stored value, because by not doing so “the stock market would be hurt.”

Well, didn’t those savers store their labor in Federal Reserve Notes that are issued at the discretion of the Board of Governors of the Federal Reserve System? Apparently, then, what the governors issue with their name on it, the governors can take away.

Quote :

“Inflation is theft of labor by dilution. One should understand that the taxation/enslavement/inflation/property-seizure axis has one common denominator and one goal only: State seizure of labor…

“After centuries of government meddling in coinage and debasement, the stage was set for the introduction of the least understood and greatest scam in the annals of history; governmentally issued paper.

“When governments place their name on money, they are placing their name on the most generic form of private property, on the most commonly exchanged commodity.  This is no different than if government placed its name on all clothing, houses or humans.  The most damaging consequence of this action is that governments have taken control of the most exchangeable form of life, which is the most important aspect of money and its relationship to trade.  Money makes the real medium of exchange more convenient.  Based on this fact, government has placed it name on man’s greatest physical instrument of morality.  It not only captured the most liquid form of productive labor, it imposed its name on the atmosphere that surrounds the free and honest dealings among men." – Hugh A. Thomas, STORED LABOR A New Theory of Money

Thu, 12/05/2013 - 01:22 | Link to Comment rosiescenario
rosiescenario's picture

Even if one's gross wages inflated equal with the rate of inflation, one's after tax take home pay did not due to 'bracket creep'. In my case my gross has beaten inflation hands down, but after taxes (and I count the self employed social security tax) not so.

The alternative minimum tax, originally was to apply only to the super rich, now strikes fear into the hearts of the average earner.

 

No need to "raise taxes" if the government can drive everyone into higher brackets.

Thu, 12/05/2013 - 03:21 | Link to Comment zipit
zipit's picture

RE: "I wonder where taxes fall in the inflation calculation, because my real estate taxes, sales taxes, income taxes, and the other 50 taxes/fees I pay": That's why I don't get that people think the US has low taxes.  It has HIGH taxes, especially when consider both sides of the equation, what you pay in taxes and what you get for them.  In the US, most people are on their own, paying for every little and big thing.  In countries with "high" taxes, the citizens get more, such as healthcare, childcare, eldercare, education, etc.  

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