If you can read this, either the style sheet didn't load or you have an older browser that doesn't support style sheets. Try clearing your browser cache and refreshing the page.

(Slate)   Fed Chairman Ben Bernanke to Congress: I'm not saying we're afraid of inflation, but we're afraid of inflation   (slate.com) divider line 53
    More: Stupid, Bernanke, Federal Reserve, congresses, inflation targeting, Federal Open Market Committee, inflation  
•       •       •

1015 clicks; posted to Business » on 19 Jul 2012 at 4:26 AM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



53 Comments   (+0 »)
   
View Voting Results: Smartest and Funniest

Archived thread

First | « | 1 | 2 | » | Last | Show all
 
2012-07-18 09:06:04 PM
i don't see the contradiction there. it seems like he's saying that he can control inflation through fed policies, but it isn't wise to make the sole goal of the fed to maintain a consistent inflation rate. that's one of the (many) reasons the european central bank is in so much trouble - its only goal is to keep inflation down, economic health be damned.
 
2012-07-18 09:19:32 PM
then stop printing money and borrowing from the fed. idiot.
 
2012-07-18 10:01:54 PM
some_beer_drinker: then stop printing money and borrowing from the fed. idiot.

Really. What's the inflation rate been, what with all this MONSTER printing of money you're saying is going on? 20%? 15% like in the '70s? 10%? 4%, the long-run average inflation in the US? Surely it's higher with all that going on, right?
 
2012-07-18 10:09:40 PM
Let's see in the last 10, food has doubled, gas has doubled. I'd say that factors into inflation.
 
2012-07-18 11:04:12 PM

Makh: Let's see in the last 10, food has doubled, gas has doubled. I'd say that factors into inflation.


Inflation is the sustained rise of general prices. Gas price increasing is a supply-side shock, but it's not inflation.
 
2012-07-19 12:39:45 AM

Ricardo Klement: Inflation is the sustained rise of general prices.


Goods and services that have risen due to prices of gas and food. Inflation. Agreed.
 
2012-07-19 02:07:36 AM

Makh: Ricardo Klement: Inflation is the sustained rise of general prices.

Goods and services that have risen due to prices of gas and food. Inflation. Agreed.


60-70% of the price of all the goods you buy is transportation cost. With diesel fuel sitting at 3.65 a gallon you better believe there is inflation!

Let's just use FedEx Freight as an example. Right now if you want to ship something with them they will charge you 22.1% for fuel. So for every hundred bucks of shipping cost they are going to throw $22.10 on top of that for fuel. That's a big deal!


http://www.fedexfreight.fedex.com/fue lSurcharge.do

And for your general education:
http://www.eia.gov/petroleum/gasdiese l/
 
2012-07-19 02:18:02 AM
What I think he was getting at was that it is dangerous to try to set an artificial inflation limit in hopes of stimulating the economy. The Fed can respond to changes in the economy and hence somewhat try to limit or encourage inflation but to try to use that power to set an arbitrary inflation number to try to control the economy is very dangerous (and stupid).
 
2012-07-19 05:11:02 AM
mimg.ugo.com
 
2012-07-19 07:39:12 AM

some_beer_drinker: then stop printing money and borrowing from the fed. idiot.


Printing money is not always inflationary. I know what your high school consumer ed teacher taught you, but think it through.

If aggregate wealth of your country has gone down (because of, say, a housing market collapse at the same time as a stock market slump) by say, 12 trillion spendable dollars, it does not hurt consumer prices one iota to increase the money supply by 12 trillion dollars. In fact, failure to do so could obliterate the economy.

Furthermore, as long as there are more goods and services to purchase than there were in a previous year, it does not hurt to have a higher money supply. Again, failing to increase the money supply causes problems.

Sometimes, printing money is the proper move, like say... recently. Or every year since 1982. The fed is and has been doing its job. This is what is there for.

Obviously, you cant do this indefinitely, there has to be a balance. The scary part is when the government gets addicted to spending this money and the markets come back.

/ Glen Beck and Rush didnt tell you that, did they?
// why would they? Gold marketers are paying their salary.
 
2012-07-19 07:49:19 AM

Makh: Ricardo Klement: Inflation is the sustained rise of general prices.

Goods and services that have risen due to prices of gas and food. Inflation. Agreed.


That is not inflation, nor are the prices of everything affected by the price of food and oil. Supply shocks have all kinds of bad effects on output and GDP, but food and gas prices doubling does not cause inflation.
 
2012-07-19 07:58:36 AM

anwserman: [mimg.ugo.com image 528x295]


Couldn't have responded any better.


What the Fed is afraid of is deflation. They LOVE inflation because they can pay back the enormous debt they've created with cheaper Dollars and those same inflated Dollars make the stock market look artificially better.

Bailout Ben & Co. need to get off this low interest rate fiasco they've created, and let the over-night-lending rate slowly trend back up. This will get the banks to start lending again and let folks on fixed incomes come up for a wee bit of air. I'm not saying rates need to come up much, but their strategy needs to change.
 
2012-07-19 08:19:58 AM

StrikitRich: What the Fed is afraid of is deflation. They LOVE inflation because they can pay back the enormous debt they've created with cheaper Dollars and those same inflated Dollars make the stock market look artificially better.


Yes, inflation helps debtors and they're debtors.

But, also, inflation is, up to chaotic hyperinflation, a controllable condition. Countries go through Ford/Carter-era inflation (9-10%) all the time. Countries survive 15-20% inflation pretty regularly. (Those are not hyperinflation). And policymakers generally know how to stop it with a little shock therapy.

Deflation, on the other hand, has a self-reinforcing feedback loop that's very hard to break by any policy, even most stimulus spending.
 
2012-07-19 08:44:50 AM

thomps: i don't see the contradiction there. it seems like he's saying that he can control inflation through fed policies, but it isn't wise to make the sole goal of the fed to maintain a consistent inflation rate. that's one of the (many) reasons the european central bank is in so much trouble - its only goal is to keep inflation down, economic health be damned.


Maybe it would make more sense if we establish that the Fed's target inflation has been ~2% for the last several decade or so, instead of the 4% that Bernanke mentioned in his testimony. He's telling Congress that he's unwilling to set a higher inflation target, which would ease credit and spur the economy, because he's afraid of runaway inflation, which he earlier said is not a problem.

/subby
 
2012-07-19 08:44:59 AM
This man is developmentally disabled.
 
2012-07-19 08:46:07 AM
Stagflation, how work it.
 
2012-07-19 09:00:27 AM

Lawnchair: Yes, inflation helps debtors and they're debtors.


No they're not. The Fed is the ultimate creditor. Are you confusing them and the Treasury?

But yes, that would explain their relation to inflation.
 
2012-07-19 09:02:11 AM
According to the Feds, there hasn't been much inflation in the last couple of years.

A lot of it has been ignored - or camouflaged - by the government. Food prices are a big part of that. They say that food prices have held steady, or increased by only a percent or so per year. Unfortunately, while "per package" prices have stayed fairly level, "per ounce" prices have jumped up on many of them.

An example - tortilla chips. My favorite cheap brand is the same price as it was two years ago. At least, the same price per bag.

The same bag - same size, same price - now hold 13 ounces instead of 16 ounces. Per ounce, that's over 10% inflation per year.

Quite a few other items got smaller while keeping the same price.

Some things got "cheaper" while keeping the same prices (cheaper packaging, lower ingredient quality). A large number of others just flat disappeared from store shelves (higher-priced "luxury" goods that people weren't buying in amounts large enough for the store to keep around).

By careful selection of products and ignoring the details about the actual products, it's easy enough for a mid-level bureaucrat to pretend there's very little food inflation.
 
2012-07-19 09:25:27 AM

Arkanaut: thomps: i don't see the contradiction there. it seems like he's saying that he can control inflation through fed policies, but it isn't wise to make the sole goal of the fed to maintain a consistent inflation rate. that's one of the (many) reasons the european central bank is in so much trouble - its only goal is to keep inflation down, economic health be damned.

Maybe it would make more sense if we establish that the Fed's target inflation has been ~2% for the last several decade or so, instead of the 4% that Bernanke mentioned in his testimony. He's telling Congress that he's unwilling to set a higher inflation target, which would ease credit and spur the economy, because he's afraid of runaway inflation, which he earlier said is not a problem.

/subby


4% is the long-run average inflation in the US. That might have been what he was referring to.
 
2012-07-19 09:27:31 AM

HotIgneous Intruder: Stagflation, how work it.


Stagflation requires inflation be high while unemployment is high. This is a long-run effect.
 
2012-07-19 09:30:23 AM

cirby: By careful selection of products and ignoring the details about the actual products, it's easy enough for a mid-level bureaucrat to pretend there's very little food inflation.


Except that the way inflation is calculated is not a secret. Any private firm can bolster its credibility (and therefore profits) by using the same method to come up with more accurate inflation numbers. There's way too much money to be made in economic analysis shops for the government to be able to hide true inflation. Wall Street makes way too much money on information to let itself get fooled by a mid-level bureaucrat.
 
2012-07-19 09:31:35 AM

StrikitRich: They LOVE inflation because they can pay back the enormous debt they've created with cheaper Dollars and those same inflated Dollars make the stock market look artificially better.


They've been doing a really shiatty job of causing inflation.
 
2012-07-19 10:04:26 AM

cirby: According to the Feds, there hasn't been much inflation in the last couple of years.

A lot of it has been ignored - or camouflaged - by the government. Food prices are a big part of that. They say that food prices have held steady, or increased by only a percent or so per year. Unfortunately, while "per package" prices have stayed fairly level, "per ounce" prices have jumped up on many of them.

An example - tortilla chips. My favorite cheap brand is the same price as it was two years ago. At least, the same price per bag.

The same bag - same size, same price - now hold 13 ounces instead of 16 ounces. Per ounce, that's over 10% inflation per year.

Quite a few other items got smaller while keeping the same price.

Some things got "cheaper" while keeping the same prices (cheaper packaging, lower ingredient quality). A large number of others just flat disappeared from store shelves (higher-priced "luxury" goods that people weren't buying in amounts large enough for the store to keep around).

By careful selection of products and ignoring the details about the actual products, it's easy enough for a mid-level bureaucrat to pretend there's very little food inflation.


Another example: Totino's Party Pizzas (admittedly not the best pizza in the world) - just a few years ago the price was ~$.99/ea with sale prices sometimes of ~$.89. Now they are regularly $1.50/ea. They haven't gotten any smaller at least...
 
2012-07-19 10:09:06 AM
Ricardo Klement:
Except that the way inflation is calculated is not a secret.

The way they do it is public - the actual items they use to calculate food inflation is a secret.

They change "the list" every year or so, to supposedly keep private firms from meddling with the way the government meddles with inflation calculations.

When you look at the released CPI numbers, you have a tendency to ask "where are they shopping?" The prices reflected in the CPI don't agree with any prices I've seen in the US (and I travel a good bit, so I see a wide range), or any comments by anyone I know.

There's way too much money to be made in economic analysis shops for the government to be able to hide true inflation.

That's the funny thing - a lot of independent analysts say that inflation is at least 5%. It's hard to find someone who thinks it's under 3% who isn't using Federal numbers to arrive at that conclusion. Note that the CPI uses "shelter costs" to arrive at their number - which means the housing crash was "good" for inflation, and made a lot of it invisible in the stats.

Link for example.

Some of the outlying private estimates run the inflation rate as high as 9%... though I tend to ignore the extreme estimates, some of them make a good case for six to eight percent.

It's pretty obvious that the actual inflation rate for the last few years has been at least 5% - and this is while wages are falling, giving an effective "spending per dollar earned" rate that's a few percent higher.

By the way - if we measured inflation using the same measures as they did up to about 1980, it would be well over 10% per year.
 
2012-07-19 10:16:54 AM

Ricardo Klement: What's the inflation rate been, what with all this MONSTER printing of money you're saying is going on? 20%? 15% like in the '70s? 10%? 4%, the long-run average inflation in the US? Surely it's higher with all that going on, right?


1) The method of calculating inflation changed in the 90's as a way to help control the rise in entitlements. Link

2) Inflation is the increase of the money supply, which typically leads to higher prices. You can't just look at prices and say see they didn't go up, no inflation! Why? Because without the inflationary fed policies, prices would have been going down. The fact they're slightly going up (debatable) rather than down is "inflation".
 
2012-07-19 10:25:27 AM

StrikitRich: anwserman: [mimg.ugo.com image 528x295]

Couldn't have responded any better.


What the Fed is afraid of is deflation. They LOVE inflation because they can pay back the enormous debt they've created with cheaper Dollars and those same inflated Dollars make the stock market look artificially better.

Bailout Ben & Co. need to get off this low interest rate fiasco they've created, and let the over-night-lending rate slowly trend back up. This will get the banks to start lending again and let folks on fixed incomes come up for a wee bit of air. I'm not saying rates need to come up much, but their strategy needs to change.


And you should be afraid of deflation if you've got any debt. Terrified to be precise. Wages and prices are tied together, but the debts don't change. The US experienced 10% year-over-year deflation from 1930 through 1932. If we had another 3 year run like that it would kill us.
 
2012-07-19 10:26:58 AM
I recognize that some people would advocate that we set an inflation target at, say, 4 percent and maintain that for a number of years. I don't think first that we could do that without losing control of the inflation process.

I don't understand this. If he can run it around 2% like he has for the past four years and Volcker and Greenspan ran it around 3% for the previous 30 years, then why can't it be held at 4%?
 
2012-07-19 10:27:20 AM

cirby: Ricardo Klement:
Except that the way inflation is calculated is not a secret.

The way they do it is public - the actual items they use to calculate food inflation is a secret.

They change "the list" every year or so, to supposedly keep private firms from meddling with the way the government meddles with inflation calculations.

When you look at the released CPI numbers, you have a tendency to ask "where are they shopping?" The prices reflected in the CPI don't agree with any prices I've seen in the US (and I travel a good bit, so I see a wide range), or any comments by anyone I know.

There's way too much money to be made in economic analysis shops for the government to be able to hide true inflation.

That's the funny thing - a lot of independent analysts say that inflation is at least 5%. It's hard to find someone who thinks it's under 3% who isn't using Federal numbers to arrive at that conclusion. Note that the CPI uses "shelter costs" to arrive at their number - which means the housing crash was "good" for inflation, and made a lot of it invisible in the stats.

Link for example.

Some of the outlying private estimates run the inflation rate as high as 9%... though I tend to ignore the extreme estimates, some of them make a good case for six to eight percent.

It's pretty obvious that the actual inflation rate for the last few years has been at least 5% - and this is while wages are falling, giving an effective "spending per dollar earned" rate that's a few percent higher.

By the way - if we measured inflation using the same measures as they did up to about 1980, it would be well over 10% per year.


The CPI basket and inflation are not quite the same thing. Also, note that the CPI basket is calculated on the goods and services purchased by the typical urban consumer. The other thing is that core inflation is calculated without food and energy costs PRECISELY because they fluctuate so wildly and are very vulnerable to shocks. (ie, the drought is going to send food prices up, but that is hardly the fed's fault.)

There's a reason the Wall Street Journal says the inflation is under 3%, and it's not because of its love for Obama.
 
2012-07-19 10:29:47 AM

MugzyBrown: Ricardo Klement: What's the inflation rate been, what with all this MONSTER printing of money you're saying is going on? 20%? 15% like in the '70s? 10%? 4%, the long-run average inflation in the US? Surely it's higher with all that going on, right?

1) The method of calculating inflation changed in the 90's as a way to help control the rise in entitlements. Link

Think about what you just said - just because some guy with a calculator enters different numbers doesn't do ANYTHING to control costs in the real world. (Or that's a calculator that's as powerful as the hot tub time machine.)

2) Inflation is the increase of the money supply, which typically leads to higher prices. You can't just look at prices and say see they didn't go up, no inflation! Why? Because without the inflationary fed policies, prices would have been going down. The fact they're slightly going up (debatable) rather than down is "inflation".

With the way people are running around with their hair on fire about the fed "printing money", you'd think we were on the brink of hyper-inflation. If you truly believe we'd be deflating instead, you ought to be kissing Bernanke's feet for preventing it.

 
2012-07-19 10:32:46 AM

Rapmaster2000: And you should be afraid of deflation if you've got any debt. Terrified to be precise. Wages and prices are tied together, but the debts don't change. The US experienced 10% year-over-year deflation from 1930 through 1932. If we had another 3 year run like that it would kill us.


You should be terrified of having a job, even if you DON'T have debt. If I know the cost of a car is going to go down next month, why would I buy it now (yeah, yeah - unless I absolutely HAD to, which most people don't buy cars when they're desperate). If that MacBook Pro you want is going to be $100 less next month, would you wait? Since all products prices would go down, everyone would wait until they HAD to buy something, and manufacturing would stop until inventories started going down again.

ie - layoffs. Everywhere. In virtually every industry.
 
2012-07-19 10:34:36 AM

Rapmaster2000: I recognize that some people would advocate that we set an inflation target at, say, 4 percent and maintain that for a number of years. I don't think first that we could do that without losing control of the inflation process.

I don't understand this. If he can run it around 2% like he has for the past four years and Volcker and Greenspan ran it around 3% for the previous 30 years, then why can't it be held at 4%?


It can be. Hayek and Keynes both would tell you it's easy to boost inflation. Hayek would say just print money. Keynes would say you could do it other ways as well. But higher inflation means greater demand for money and that means less demand for bonds and that means higher interest rates.
 
2012-07-19 10:36:35 AM

Rapmaster2000: The US experienced 10% year-over-year deflation from 1930 through 1932. If we had another 3 year run like that it would kill us.


There isn't a statistical link between deflation and economic depression.

Link

In fact there is there have been several periods of deflation and economic growth

Pdf Link

In fact, it just follows logically that if the economy is improving, then there are increased efficiencies which should lead to lower prices
 
2012-07-19 10:41:31 AM

GanjSmokr: Another example: Totino's Party Pizzas (admittedly not the best pizza in the world) - just a few years ago the price was ~$.99/ea with sale prices sometimes of ~$.89. Now they are regularly $1.50/ea. They haven't gotten any smaller at least...


My go-to is peanut butter. A couple of years ago, I used to be able to get it for under $2, sometimes on sale around a buck. These days I have a hard time finding it for less than $3, and rarely on sale for less than $2.50. Jars are getting smaller, too.
 
2012-07-19 10:48:36 AM
Rapmaster2000:
Wages and prices are tied together, but the debts don't change.

Actually, they do change.

A huge amount of debt in the US is variable-APR debt - and when the Prime rate goes up, so does the interest rate, with no warning needed. A lot of short-term debt is defined by language like "prime rate +12%" or "prime rate + 21.3%".

The prime rate is influenced heavily by - you got it - the official inflation rate. When inflation officially skyrockets, so does the prime - and so does the interest rate on a lot of credit cards and other loans. If the prime rate jumped to 10% or so, interest rates would jump by several percent.

Of course, the prime rate is also heavily influenced by the rate that the Federal Reserve sets - and that rate is near zero right now. Historically, that rate has been at least two percent, and is usually five percent or higher. By setting that rate to artificially low levels, it keeps the prime rate low - and cuts billions Fed income (which will have to be made up some time, or the whole system comes to a crashing halt). By keeping the Fed rate at near zero, the effect is to "hide" about three percent of the current inflation (so instead of 3%, it should be closer to 6% or higher).

Artificially low Fed rates just push inflation off into the future (high rates make the inflation happen faster, overall - Carter proved that in the 1970s). We'll see a huge chunk of inflation a couple of years from now, when the Fed normalizes their rates...

(Note that the prime rate influences inflation, which influences the prime rate - you can see how that can turn into a nasty problem really fast...)
 
2012-07-19 10:51:14 AM

IrateShadow: GanjSmokr: Another example: Totino's Party Pizzas (admittedly not the best pizza in the world) - just a few years ago the price was ~$.99/ea with sale prices sometimes of ~$.89. Now they are regularly $1.50/ea. They haven't gotten any smaller at least...

My go-to is peanut butter. A couple of years ago, I used to be able to get it for under $2, sometimes on sale around a buck. These days I have a hard time finding it for less than $3, and rarely on sale for less than $2.50. Jars are getting smaller, too.


Yep, peanut butter is a good example too. Bacon is hard to find anymore for <$4/pkg. If I see it on sale for less than $4 I buy up at least 10 packages to throw in the freezer.

Will be interesting to see food prices once the rising corn prices get factored in in the coming months... good times.
 
2012-07-19 11:13:01 AM
MugzyBrown:
In fact, it just follows logically that if the economy is improving, then there are increased efficiencies which should lead to lower prices

That's happening already, but not in a way that many would consider "good."

For example, in the CPI, they include things like electronic entertainment (cable and satellite dish subscriptions). A lot of people are cutting way back on those (fewer premium channels, or unsubscribing completely). According to the CPI, that means "prices are down" - but they haven't gotten around to adjusting the percentage of monthly income they assume people spend on those things. So it looks like cable and satellite subscriptions are deflating, when they're really just selling a lot less.

I cut my cable services by more than half. I spend a bit more by subscribing to a couple of internet video services and by paying for a faster internet connection, but the overall monthly fee cut is still about thirty percent. It would be at least 20% more expensive if I had the same services, but it looks like a price cut - if you don't adjust the numbers.

Have you seen the news articles about cable and satellite services arguing with channel providers about rates? That's part of the fallout of the large decrease in cable/sat subscription spending... but according to the CPI, people are spending the same, because they haven't adjusted those numbers yet.

Fuel costs are another piece of the puzzle. Gas and oil prices are down - because people are using less of both. Lower demand generally equals lower prices. But if you assume the percentage people spend per month is the same, it looks like a huge cut in inflation, when it's mostly a measure of how much less money people have to spend on unneeded driving. Everyone I know is driving less, and staying home more, but the CPI measure still assumes the same amount of vehicle usage...
 
2012-07-19 11:20:00 AM

GanjSmokr: Will be interesting to see food prices once the rising corn prices get factored in in the coming months... good times.


Got my deer and elk tags already for this year. Haven't bought any beef for over 3 years now. Pork on the other hand.....
 
2012-07-19 11:31:22 AM

cirby: MugzyBrown:
In fact, it just follows logically that if the economy is improving, then there are increased efficiencies which should lead to lower prices

That's happening already, but not in a way that many would consider "good."

For example, in the CPI, they include things like electronic entertainment (cable and satellite dish subscriptions). A lot of people are cutting way back on those (fewer premium channels, or unsubscribing completely). According to the CPI, that means "prices are down" - but they haven't gotten around to adjusting the percentage of monthly income they assume people spend on those things. So it looks like cable and satellite subscriptions are deflating, when they're really just selling a lot less.

I cut my cable services by more than half. I spend a bit more by subscribing to a couple of internet video services and by paying for a faster internet connection, but the overall monthly fee cut is still about thirty percent. It would be at least 20% more expensive if I had the same services, but it looks like a price cut - if you don't adjust the numbers.

Have you seen the news articles about cable and satellite services arguing with channel providers about rates? That's part of the fallout of the large decrease in cable/sat subscription spending... but according to the CPI, people are spending the same, because they haven't adjusted those numbers yet.

Fuel costs are another piece of the puzzle. Gas and oil prices are down - because people are using less of both. Lower demand generally equals lower prices. But if you assume the percentage people spend per month is the same, it looks like a huge cut in inflation, when it's mostly a measure of how much less money people have to spend on unneeded driving. Everyone I know is driving less, and staying home more, but the CPI measure still assumes the same amount of vehicle usage...


Don't confuse inflation and deflation, which is a GENERAL CHANGE IN PRICE LEVELS, with the change in the price of individual products or within a given industry. You cannot think of those interchangeably, and that's what you seem to be doing.
 
2012-07-19 11:39:48 AM
Ricardo Klement:
Don't confuse inflation and deflation, which is a GENERAL CHANGE IN PRICE LEVELS, with the change in the price of individual products or within a given industry. You cannot think of those interchangeably, and that's what you seem to be doing.

The only reason I "seem to be doing so" is that you're looking at trees and not seeing the forest. Actually, you're looking at a book about forests and not noticing that the actual trees are on fire.

I was using the changes in prices in (more than one) industry to illustrate how inflation is not being measured correctly by the US government. If they're not (for example) measuring how almost all cable bills are inflating (while people are spending less by buying smaller channel packages or cutting it out completely), then what makes you think they're doing the rest of it right?

The GENERAL CHANGE IN PRICE LEVELS is pretty damned obvious to everyone except for some desperate economists and a bunch of naive people who want the economy to be better than it truly is.
 
2012-07-19 11:42:53 AM

cirby: Ricardo Klement:
Don't confuse inflation and deflation, which is a GENERAL CHANGE IN PRICE LEVELS, with the change in the price of individual products or within a given industry. You cannot think of those interchangeably, and that's what you seem to be doing.

The only reason I "seem to be doing so" is that you're looking at trees and not seeing the forest. Actually, you're looking at a book about forests and not noticing that the actual trees are on fire.

I was using the changes in prices in (more than one) industry to illustrate how inflation is not being measured correctly by the US government. If they're not (for example) measuring how almost all cable bills are inflating (while people are spending less by buying smaller channel packages or cutting it out completely), then what makes you think they're doing the rest of it right?

The GENERAL CHANGE IN PRICE LEVELS is pretty damned obvious to everyone except for some desperate economists and a bunch of naive people who want the economy to be better than it truly is.


Except your analysis is not even amateurish. Ye Gods man, have you even taken ONE macroeconomics class?
 
2012-07-19 11:57:47 AM

Ricardo Klement: cirby: By careful selection of products and ignoring the details about the actual products, it's easy enough for a mid-level bureaucrat to pretend there's very little food inflation.

Except that the way inflation is calculated is not a secret. Any private firm can bolster its credibility (and therefore profits) by using the same method to come up with more accurate inflation numbers. There's way too much money to be made in economic analysis shops for the government to be able to hide true inflation. Wall Street makes way too much money on information to let itself get fooled by a mid-level bureaucrat.


First of all, lower inflation numbers make stocks look better. Would Wall Street rather see a 10% increase in a stock or a 3% increase?

Second of all, if Wall Street is so concerned about inflation, they'd run their own numbers for their own use, much like an airport observes the weather outside the tower rather than just relying on what the newspaper said that morning.

The fed's "equivalency" with durable goods is a joke. You cannot compare a washing machine made out of 16ga steel designed to last 20 years with one that's made out of 20ga and designed to last 5.
 
2012-07-19 12:24:53 PM
"Inflation is what gives the FED it's power. It's a currency wave created by all living things. It surrounds us and penetrates us. It binds economies together."

-Old Crazy Ben
 
2012-07-19 12:50:13 PM

cirby: The GENERAL CHANGE IN PRICE LEVELS is pretty damned obvious to everyone except for some desperate economists and a bunch of naive people who want the economy to be better than it truly is.


Yes, because your anecdotal observations are clearly better than those of the statisticians at the BLS or working on MIT's billion prices project. Their enormous price databases are clearly inferior to your purchases of peanut butter and frozen pizzas and the world needs to know the truth!
 
2012-07-19 01:24:42 PM

Goimir: Ricardo Klement: cirby: By careful selection of products and ignoring the details about the actual products, it's easy enough for a mid-level bureaucrat to pretend there's very little food inflation.

Except that the way inflation is calculated is not a secret. Any private firm can bolster its credibility (and therefore profits) by using the same method to come up with more accurate inflation numbers. There's way too much money to be made in economic analysis shops for the government to be able to hide true inflation. Wall Street makes way too much money on information to let itself get fooled by a mid-level bureaucrat.

First of all, lower inflation numbers make stocks look better. Would Wall Street rather see a 10% increase in a stock or a 3% increase?

Second of all, if Wall Street is so concerned about inflation, they'd run their own numbers for their own use, much like an airport observes the weather outside the tower rather than just relying on what the newspaper said that morning.

The fed's "equivalency" with durable goods is a joke. You cannot compare a washing machine made out of 16ga steel designed to last 20 years with one that's made out of 20ga and designed to last 5.


First off, people aren't morons. They care about the real value of things - just like YOU do. They're not interested in illusions because that eventually costs them a shiatload of money.

Second, the since there are many firms, one of two things is true: 1) they all come up with the SAME number, in which case, it's a farking moronic thing to consider it secret in any way shape or form, or they will come up with different numbers, in which case you have a market for a firm to sell the REAL and ACCURATE number, and again, secrecy makes no sense. Look at the monetary incentives, and you'll find that there's always someone who's willing to sell an accurate number, since it's not based on anything secret.

Finally, you pretend as if the equivalency is a) mistaken or b) important. If you have to buy a new machine every year, the cost of one a year is in the basket. If one every 20, then only 1/20th the cost in the yearly basket. This is really trivial to do.
 
2012-07-19 01:26:08 PM

OptionC: cirby: The GENERAL CHANGE IN PRICE LEVELS is pretty damned obvious to everyone except for some desperate economists and a bunch of naive people who want the economy to be better than it truly is.

Yes, because your anecdotal observations are clearly better than those of the statisticians at the BLS or working on MIT's billion prices project. Their enormous price databases are clearly inferior to your purchases of peanut butter and frozen pizzas and the world needs to know the truth!


It's the Jenny McCarthy anti-vaxx approach to economics.
 
2012-07-19 01:36:49 PM

cirby: Ricardo Klement:
Don't confuse inflation and deflation, which is a GENERAL CHANGE IN PRICE LEVELS, with the change in the price of individual products or within a given industry. You cannot think of those interchangeably, and that's what you seem to be doing.

The only reason I "seem to be doing so" is that you're looking at trees and not seeing the forest. Actually, you're looking at a book about forests and not noticing that the actual trees are on fire.

I was using the changes in prices in (more than one) industry to illustrate how inflation is not being measured correctly by the US government. If they're not (for example) measuring how almost all cable bills are inflating (while people are spending less by buying smaller channel packages or cutting it out completely), then what makes you think they're doing the rest of it right?

The GENERAL CHANGE IN PRICE LEVELS is pretty damned obvious to everyone except for some desperate economists and a bunch of naive people who want the economy to be better than it truly is.


They're inflating because they're trying to protect their profit margin - and people aren't fleeing because it's "too expensive", they're fleeing because it's "too expensive when compared to an internet connection/Netflix/Hulu subscrip". They're losing market share because of a cheaper alternative but because of shortsightedness, they're trying to make up the dwindling profit by increasing rates on remaining customers.

(MIght not be all of it, but that's definitely a BIG part of it.)
 
2012-07-19 02:27:33 PM

some_beer_drinker: then stop printing money and borrowing from the fed. idiot.

 
2012-07-19 03:38:41 PM

Goimir: Second of all, if Wall Street is so concerned about inflation, they'd run their own numbers for their own use, much like an airport observes the weather outside the tower rather than just relying on what the newspaper said that morning.


There is an independent project run by MIT to track the prices of goods by looking at prices listed online: Link

It seems to actually lead the CPI somewhat, but generally the two indices track pretty closely.
 
2012-07-19 04:02:09 PM

Arkanaut: Goimir: Second of all, if Wall Street is so concerned about inflation, they'd run their own numbers for their own use, much like an airport observes the weather outside the tower rather than just relying on what the newspaper said that morning.

There is an independent project run by MIT to track the prices of goods by looking at prices listed online: Link

It seems to actually lead the CPI somewhat, but generally the two indices track pretty closely.


Nono... there's a secret CPI. Because otherwise this would mean the government wasn't lying about something.
 
2012-07-19 11:27:38 PM
How come no one talks about the M1 and M2 money supplies on the nightly news anymore. Was that just a spiel to get Reagan elected?
 
Displayed 50 of 53 comments

First | « | 1 | 2 | » | Last | Show all

View Voting Results: Smartest and Funniest


This thread is archived, and closed to new comments.

Continue Farking
Submit a Link »






Report