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Old 01-08-2018, 02:40 PM
 
Location: Myrtle Creek, Oregon
11,056 posts, read 11,465,626 times
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Quote:
Originally Posted by lieqiang View Post
I ask again, which President or congress ordered CPI changed and how did they do it?

A methodology that you, with your own personal biases considers flaws doesn't make it any worse than any other methodology. There are tons of smug internet armchair statisticians that believe their personal preference to how something should be done, not based on any formal education or training but just reading articles in their own echo chamber. A degree from University of ZeroHedge doesn't carry much weight in the real world.
You know, if you really wanted to learn something you could look this up yourself. You could start with the Stigler Commission in 1961 and the Boskin Commission in 1995, both commissioned by Congress. Then there were reductions ordered by Jimmy Carter (1978) and the removal of housing from the calculation in 1983 (Reagan).

Instead of spouting ideology, try educating yourself.
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Old 01-08-2018, 02:40 PM
 
64,651 posts, read 66,158,228 times
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Quote:
Originally Posted by artillery77 View Post
I get what you're saying, but I think the range is too narrow.

If I received a loan of Zimbabwe money in 2000, and had to pay it back today, assuming I received SOMETHING of value, I just got it for free. If I bought Zimbabwe treasury bonds, then I'm an idiot, as even then an individual isn't going to get a loan cheaper than the country can. (I hope) However, if I bought US bonds, I'm a genius because of the FX movement. If I bought property whose income will go up with inflation, then I'm an even bigger genius.

As more of the the US debt is held overseas, inflation starts to make more sense, assuming it doesn't outpace income or become uncontrolled...but it works a lot better if we had a trade surplus....which would inherently make it hard to create outsized inflation.

Certainly it's not the best way to do things. I believe reading the history of the Italian lira would be a good place for actual research.
key words are received something of value , THAT EXCEED THAT ZIMBABWE INFLATION . . what if you bought something that is worthless today or failed to keep up with Zimbabwe inflation , it still has value but it certainly is not an inflation hedge . you would still pay back more than it is worth . remember we are talking about using borrowed money to buy an inflation hedge . .

so it goes back to what i said . money is a vehicle for buying things . if we buy something that acts as a hedge and has a value that exceeds inflation than it is what we bought that is the hedge .

don't forget i can take that money i borrowed buy Zimbabwe bonds and in high inflation i have no inflation hedge as a result of borrowing money .

in fact anyone who has that same thing you do that the same inflation hedge even without borrowed money . they could have bought it years ago with their own money .

so money buys things . whether you win or lose with inflation depends on what you buy
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Old 01-08-2018, 06:40 PM
 
2,360 posts, read 1,029,790 times
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Quote:
Originally Posted by Zymer View Post
Ummmmm...what?

Employee: "Hey, Boss, I know it costs us $15 to make this widget, but we should sell it for $10."

Boss: "What the #%@$ is wrong with you? We'll lose $5 on every unit."

Employee: "Well, we'll make it up in volume."

Boss: "No, we'll make it up with your salary. You're too stupid to work here. You're fired."
I try to edit it.. but if the unit is cost 5$ and u can sell it for 8$ so everybody can afford it. If you sell it at say $20 then your clients are consider upper class.. ( just a example) as the poor folks cant get it at 20 bucks but they can at 8.
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Old 01-09-2018, 12:27 PM
 
Location: midvalley Oregon and Eastside seattle area
2,927 posts, read 1,351,301 times
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We are and have been in deflation since early 2000s, if not since 1985
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Old 01-09-2018, 12:34 PM
 
8,293 posts, read 3,458,668 times
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Quote:
Originally Posted by leastprime View Post
We are and have been in deflation since early 2000s, if not since 1985
Hoose we?
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Old 01-09-2018, 05:50 PM
 
Location: Gilbert, Arizona
2,600 posts, read 1,007,385 times
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Quote:
Originally Posted by hitpausebutton2 View Post
With things going up and up, but not checks. What is the purpose of inflating the market? And yes i did do some reading and cost-push is the cause of over pricing?

Why is it hard to keep the prices in check while increasing wages?
Cost-push inflation is due to wage increases that cause businesses to raise prices to cover higher labor costs, which leads to demand for still higher wages (the wage-price spiral)

Read more: What is inflation? definition and meaning - BusinessDictionary.com
Inflation will always be the case, deflation is terrible for the economy.

Over time this number goes higher and higher because it's caused by the never-ending cycle of higher wages -> (and therefore, increased consumption and prices) -> higher prices, etc.. repeat.
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Old 01-09-2018, 06:22 PM
 
2,360 posts, read 1,029,790 times
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Quote:
Originally Posted by man4857 View Post
Inflation will always be the case, deflation is terrible for the economy.

Over time this number goes higher and higher because it's caused by the never-ending cycle of higher wages -> (and therefore, increased consumption and prices) -> higher prices, etc.. repeat.
Right, cycle keeps going on and on with no end.

Their needs to be some kinda system to keep things in better check vs just auto rise the prices to delete the offset in wages. It seems it is design to make people work more for less and keep us in check vs keeping the system that is control by the wealth in check. Amazing how wages are always the last thing to get a increase but food and housing is always the first to get a price increase.
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Old 01-09-2018, 07:36 PM
 
Location: Gilbert, Arizona
2,600 posts, read 1,007,385 times
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Quote:
Originally Posted by hitpausebutton2 View Post
Right, cycle keeps going on and on with no end.

Their needs to be some kinda system to keep things in better check vs just auto rise the prices to delete the offset in wages. It seems it is design to make people work more for less and keep us in check vs keeping the system that is control by the wealth in check. Amazing how wages are always the last thing to get a increase but food and housing is always the first to get a price increase.
I don't think you can realistically implement that kind of system unless you control people's financial decisions. ("People's" meaning, both individuals and corporations).

Like you'd have to prevent people from overspending from using credit cards and companies from providing so much credit.
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Old 01-10-2018, 12:21 AM
 
Location: Silicon Valley
2,760 posts, read 1,214,346 times
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Quote:
Originally Posted by mathjak107 View Post
key words are received something of value , THAT EXCEED THAT ZIMBABWE INFLATION . . what if you bought something that is worthless today or failed to keep up with Zimbabwe inflation , it still has value but it certainly is not an inflation hedge . you would still pay back more than it is worth . remember we are talking about using borrowed money to buy an inflation hedge . .

so it goes back to what i said . money is a vehicle for buying things . if we buy something that acts as a hedge and has a value that exceeds inflation than it is what we bought that is the hedge .

don't forget i can take that money i borrowed buy Zimbabwe bonds and in high inflation i have no inflation hedge as a result of borrowing money .

in fact anyone who has that same thing you do that the same inflation hedge even without borrowed money . they could have bought it years ago with their own money .

so money buys things . whether you win or lose with inflation depends on what you buy
Ok, so let's say in 2014, I buy GE stock. I hit the high and get it for $26.xx a share. I don't have USD though, so instead I buy it with S. Africa Rand which are 9 to the dollar....so it costs me 240 Rand per share.

This year I sell my share of GE. Oh no, I've lost money. It's only getting $20 a share USD. However, I now get 12 Rand per dollar so my total return is 240 Rand. So there's no local currency loss, but my buying power has dropped 25%.

However if I'd borrowed the money instead then I have no local currency loss AND the buying power loss is handed to the bank, who may or may not make it up with interest charged.

If GE had gone to 30 USD instead, my cash buying self would be happy to pocket a $3 US Gain and bring it home for 360 Rand. My local currency gain is 50%, but I still suffer the currency buying power drop of 25%

If the money was borrowed, I get my 50% gain in LC while the bank still takes the USD loss on the principle, and I on the gain only...as I can repay that loan in cheaper rand. My 120 Rand doesn't buy as much as it once did, but my buying power has increased as i didn't have money before.

In reading some of the other conversations, I'm getting the context though. Inflation will not help the US and her debts because it buys treasuries. It doesn't/can't hedge.
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Old 01-10-2018, 01:37 AM
 
64,651 posts, read 66,158,228 times
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what you are really doing is playing the currency market as an investor would . so you are buying a currency investment on margin in effect with the money that let you profit . it could easily have gone down too if you used the wrong currency .

you are trying to dream up scenario's where a loan will be an inflation hedge . it will never be a hedge. . only what you do with the money will ever be the actual hedge. it could be stocks , it could be foreign currency , real estate ,commodities ,etc . in the 1970's people were doing it with the swiss franc.
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