I live in the USA and I am concerned about the future. I created this blog to share my thoughts on the economy and anything else that might catch my attention.
Tuesday, December 4, 2012
The Yule Backlog
Click to enlarge.
These are the stories that the Dogs tell when the fires burn high and the wind is from the north. - Clifford D. Simak
They aired a segment on National Propaganda Radio last night focusing on the whys/hows as to how there is a movement to revise the CPI again, because....and I swear on all that is holy that this is accurate and there's a serious proposal on the table....
....the current methodology OVERSTATES INFLATION. I repeat, there are very serious people within the BLS, the Fed and other prestigious (implied /sarc) institutions, that are actively pushing to have the BLS move to a "chain inflation" methodology of tabulating inflation.
The inflation measure under consideration is called the Chained Consumer Price Index. On average, the measure shows a lower level of inflation than the more widely used Consumer Price Index.
The chained CPI assumes that as prices rise, consumers turn to lower-cost alternatives, reducing the amount of inflation they experience. For example, if the price of beef increases while the price of pork does not, people will buy more pork.
I have a better idea: If you're cold, just sleep outside in the snow, and you'll fall into a warm lull harkening death. That'll cut expenses. Substitute that. If you're hungry, instead of buying and eating food, don't. You'll really save some money that way. Screw medical coverage/treatment and driving. You don't really need to see the doctor & you can walk to wherever your going - cha-ching, money in the bank.
This is beyond surreal at this point. It's like nothing I've ever witnessed, experienced or lived through before.
This tells me (this being this noisy announcement via National Propaganda Radio) that they are floating this to see how much backlash there will be and to prepare the sheeples' minds, B.F. Skinner style, for more, bigger lies and such.
The chained CPI assumes that as prices rise, consumers turn to lower-cost alternatives, reducing the amount of inflation they experience. For example, if the price of beef increases while the price of pork does not, people will buy more pork.
I'm not going to offer an opinion that completely matches your own. Sorry!
So when you see people get all bent out of shape talking about the bogus CPI and how substitution is a conspiracy and a fraud, you may wish to think twice. We really do substitute. Without that substitution, the CPI really does overstate inflation. Further, very few substitution adjustments have been added to the CPI. I substitute a LOT more than it thinks I do.
I substitute all the time. If something becomes more expensive, I'm very likely to buy less of it. If something becomes less expensive, I'm very likely to buy more of it.
That said, if the price of all foods rose to infinity and the price of video games did not, then I would still expect the consumer price index to move to infinity. Not every substitution is a valid one.
For some products where no substitution is possible, that's a rational outcome. However, if the price of Pepsi (but not Coca Cola) became infinitely expensive tomorrow, my budget would not be infinitely doomed.
The billion prices project is a nice check for the official CPI but even it has its flaws. For the most part, it misses the cost of services.
I'm not opposed to hedonics and substitution, if done in a rational manner.
It is my belief that there has been tremendous deflation in the cost of computers for example, far more than simply the price reduction in overall systems.
My TRS-80 Model III cost $1,000. If one simply adds up all its features then it would be clear that it is beyond obsolete on every single metric. It didn't even have a hard drive. Surely hedonics is needed to make sense of what happened here.
This isn't the old days when a banana was simply a banana and a gold necklace was simply a gold necklace.
It's beginning to look a lot like Christmas [of 2007]
ReplyDeleteEverywhere you go [on the red trend line]
I offer a Yul Brenner Christmas.
ReplyDeleteThe workers of tomorrow have about the same chances against robots. Draw!
What does it say about my girlfriend and me that Westworld and Andromeda Strain have been among our favorite movies since childhood?
ReplyDeleteNow we're livin' the dream, lol. Sigh.
They aired a segment on National Propaganda Radio last night focusing on the whys/hows as to how there is a movement to revise the CPI again, because....and I swear on all that is holy that this is accurate and there's a serious proposal on the table....
ReplyDelete....the current methodology OVERSTATES INFLATION. I repeat, there are very serious people within the BLS, the Fed and other prestigious (implied /sarc) institutions, that are actively pushing to have the BLS move to a "chain inflation" methodology of tabulating inflation.
http://www.npr.org/templates/story/story.php?storyId=166513174
The inflation measure under consideration is called the Chained Consumer Price Index. On average, the measure shows a lower level of inflation than the more widely used Consumer Price Index.
The chained CPI assumes that as prices rise, consumers turn to lower-cost alternatives, reducing the amount of inflation they experience. For example, if the price of beef increases while the price of pork does not, people will buy more pork.
I have a better idea: If you're cold, just sleep outside in the snow, and you'll fall into a warm lull harkening death. That'll cut expenses. Substitute that. If you're hungry, instead of buying and eating food, don't. You'll really save some money that way. Screw medical coverage/treatment and driving. You don't really need to see the doctor & you can walk to wherever your going - cha-ching, money in the bank.
This is beyond surreal at this point. It's like nothing I've ever witnessed, experienced or lived through before.
This tells me (this being this noisy announcement via National Propaganda Radio) that they are floating this to see how much backlash there will be and to prepare the sheeples' minds, B.F. Skinner style, for more, bigger lies and such.
Billion Prices Project. Done. Easy. Hard to game. Impossible to game if you so desire.
ReplyDeletePoint is the gov't will fiddle with the "official" CPI (used to base interest on TIPs and SS COL) until they get the answer they want, 0%.
ReplyDeleteWhere's the gray recession bars?
ReplyDeleteAnonymous,
ReplyDeleteThe chained CPI assumes that as prices rise, consumers turn to lower-cost alternatives, reducing the amount of inflation they experience. For example, if the price of beef increases while the price of pork does not, people will buy more pork.
I'm not going to offer an opinion that completely matches your own. Sorry!
September 18, 2009
CPI vs. GDP Deflator
So when you see people get all bent out of shape talking about the bogus CPI and how substitution is a conspiracy and a fraud, you may wish to think twice. We really do substitute. Without that substitution, the CPI really does overstate inflation. Further, very few substitution adjustments have been added to the CPI. I substitute a LOT more than it thinks I do.
I substitute all the time. If something becomes more expensive, I'm very likely to buy less of it. If something becomes less expensive, I'm very likely to buy more of it.
That said, if the price of all foods rose to infinity and the price of video games did not, then I would still expect the consumer price index to move to infinity. Not every substitution is a valid one.
For some products where no substitution is possible, that's a rational outcome. However, if the price of Pepsi (but not Coca Cola) became infinitely expensive tomorrow, my budget would not be infinitely doomed.
Rob Dawg,
ReplyDeleteThe billion prices project is a nice check for the official CPI but even it has its flaws. For the most part, it misses the cost of services.
I'm not opposed to hedonics and substitution, if done in a rational manner.
It is my belief that there has been tremendous deflation in the cost of computers for example, far more than simply the price reduction in overall systems.
My TRS-80 Model III cost $1,000. If one simply adds up all its features then it would be clear that it is beyond obsolete on every single metric. It didn't even have a hard drive. Surely hedonics is needed to make sense of what happened here.
This isn't the old days when a banana was simply a banana and a gold necklace was simply a gold necklace.
Just an opinion.