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Old 01-10-2018, 09:23 AM
 
8,277 posts, read 3,452,461 times
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Quote:
Originally Posted by lchoro View Post
He's probably paying a lot more real estate taxes, home insurance, HOA fees, etc. Our real estate taxes have tripled in the last 15 years. Insurance and HOA fees have more than doubled. Generally, these costs track the cost of replacement and maintenance for structures which have been trending up.

I've compared costs for gas costs. It's been the same. Perhaps the costs are lower due to heavy expenditures on windows and new furnace. We have a new furnace but our heating costs are the same as before.

My health insurance premiums have gone up dramatically. Under ACA, it immediately went up 40%. There is a fairly substantial increase in premiums for individual coverage in your 50's. Also, the coverages are getting worse due to the much higher deductibles. If they applied hedonic adjustment both ways, this would count as a cost increase.

We're also paying for coverage we don't need or use. Under hedonic adjustment, the BLS would subtract that feature cost from the premium even though it had no utility to the consumer.
It doesn't sound like you have an individual policy still.

We paid about $700/mo for my wife with an individual policy until Obamacare. She is now at $950. That would not only much higher today with an individual policy, with her medical conditions no one would take her but another Obamacare (group) policy.
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Old 01-10-2018, 09:25 AM
 
6,996 posts, read 6,629,325 times
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Quote:
Originally Posted by EDS_ View Post
With respect your implied thesis that productivity growth should cause general price deflation is absurd. Productivity growth drives demand, demand drives inflation. The trick is to keep inflation in check.

The gold standard is dead and gone and it's never coming back. Let it go.
And much of the increase in output part of productivity is due to much looser financial conditions. Once they looked at only the labor part of productivity, it turned out that there was no real difference. It was a myth pushed by Greenspan in the late 90's to justify the case for lower interest rates. The reality was that the Fed had an agreement with Japan for them to purchase US treasuries to keep down interest rates.
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Old 01-10-2018, 09:29 AM
 
7,279 posts, read 8,112,371 times
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Quote:
Originally Posted by lchoro View Post
I know how the CPI was modified back in the 80's and 90's. You still haven't demonstrated any more knowledge of how the CPI is constructed, nor of the flaws and biases in the methods and internal surveys that were incorporated to lower the CPI's rate of change. The last bastion of a fraud is to hide behind an institution and claim the other side is somehow unpatriotic or libelous.
The other guy's point is spot on. For CPI to be rigged thousands of people from reporters to academics to various governmental agencies etc. for decades would have to be in on the gag.
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Old 01-10-2018, 10:00 AM
Status: "delete" (set 20 days ago)
 
3,189 posts, read 1,273,221 times
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Some things should deflate. My view is that there is an oil shock on the horizon. When that happens, I expect a lot of things to deflate. Real estate, auto prices (SUVs, Trucks), and for a lot of companies to go out of business.

For example, I saw recently where Dick's Sporting goods has free shipping. They are doing that as a drastic measure to retain financially solvent.

Retail is already under tremendous stress, DESPITE this artificial, low interest environment, so it is likely that commercial real estate and retail in particular will be hit HARD when gas prices rise. Even amazon will suffer because it will affect their logistics costs, but it will also allow them to consolidate more of the market. Not sure what the net affect will be on the stock price.

That depends on whether or not central banks deleverage their balance sheets and stop purchasing equities.

Imagine how insane it will be when gas prices are $5 a gallon and the stock market is still sky high. Not sure I see that happening, despite liquidity injections that have made the general public complacent to the main driver of the real economy, which is OIL.

Anyway, inflation will also increase due to demand pull inflation on anything related to oil, specifically transportation costs, so expect food costs to increase, which will put an additional strain on people's budgets.
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Old 01-10-2018, 10:19 AM
 
8,277 posts, read 3,452,461 times
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Quote:
Originally Posted by Jobster View Post
Some things should deflate. My view is that there is an oil shock on the horizon. When that happens, I expect a lot of things to deflate. Real estate, auto prices (SUVs, Trucks), and for a lot of companies to go out of business.

For example, I saw recently where Dick's Sporting goods has free shipping. They are doing that as a drastic measure to retain financially solvent.

Retail is already under tremendous stress, DESPITE this artificial, low interest environment, so it is likely that commercial real estate and retail in particular will be hit HARD when gas prices rise. Even amazon will suffer because it will affect their logistics costs, but it will also allow them to consolidate more of the market. Not sure what the net affect will be on the stock price.

That depends on whether or not central banks deleverage their balance sheets and stop purchasing equities.

Imagine how insane it will be when gas prices are $5 a gallon and the stock market is still sky high. Not sure I see that happening, despite liquidity injections that have made the general public complacent to the main driver of the real economy, which is OIL.

Anyway, inflation will also increase due to demand pull inflation on anything related to oil, specifically transportation costs, so expect food costs to increase, which will put an additional strain on people's budgets.
Always a worry. IMO the sudden rise gasoline prices summer of 2007 in the SE was the spark that lit the 2008 crash. in But things look a whole lot better than the '70's. There are many more sources for oil in the world, not just OPEC. We produce more and more, plus the added security buffer of better fuel mileage and alternative energies.
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Old 01-10-2018, 10:44 AM
Status: "delete" (set 20 days ago)
 
3,189 posts, read 1,273,221 times
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Originally Posted by Hoonose View Post
Always a worry. IMO the sudden rise gasoline prices summer of 2007 in the SE was the spark that lit the 2008 crash. in But things look a whole lot better than the '70's. There are many more sources for oil in the world, not just OPEC. We produce more and more, plus the added security buffer of better fuel mileage and alternative energies.
Yes, but if you look at the numbers, it's all a big lie.

There are no major discoveries anymore. A billion barrels is considered a major discovery these days, but it takes about 10 years to extract, and you will only recover about 25%.

That lasts a few days in the global economy.

The fact is, tight oil production/fracking etc, is considered unconventional oil sources. The reason we are searching for these sources is because there are less conventional sources. One look at the income statements from any tight oil producer will show you that this "technological miracle" is a bunch of BS.

Besides, I don't think people realize that the US does not have much oil that's economically viable.

The majority of it is shale which is literally an oil soaked rock, which is not the same as tight oil production which is far less expensive, but the depletion rates are extremely high.

When you get an opportunity, read about the Bakken and Permian fields and their decline rates.

Additionally, a 2014 Wikileaks report, showed where the Saudi's over-reported their oil by at least 40%. That was PRIOR to the MASSIVE production uptick at the end of 2014.

And despite green energy becoming more popular, global demand for oil is RISING.

Not sure why the US didn't do anything about this 20 years ago when they had the chance.

Now, no chance.

Worse, our politicians want to start a proxy war with the Russians who have about 60 years of oil when the US has about 5 at best. Good luck with that.

Last edited by Jobster; 01-10-2018 at 11:09 AM..
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Old 01-10-2018, 11:02 AM
 
11,304 posts, read 5,834,479 times
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Quote:
Originally Posted by engineman View Post
Inflation is a penalty to those (mostly retirees) who live on fixed income. The govt uses bogus numbers to measure the cost of living for Social Security. Then they borrow money and with inflation it is worth less when they pay it back.

Both parties are equally guilty.
Not so much in 2018. If you're retiring today, you probably don't have a defined benefit pension. You have Social Security which is COLA-protected. Not fully since retirees spend money on different things that have inflation rates different from the BLS inflation rate. A 2018 retiree has a tax deferred IRA/401(k) portfolio and real estate. Real estate tends to do a pretty good job tracking inflation or at least tracking local household income growth. A balanced retirement portfolio in the long run is going to at least out-perform the core inflation rate. There were the stagflation days and the big market correction periods like the dot.com bust and the Great Recession where it didn't but that's Mathjak's market sequencing issue he writes about frequently.

Inflation largely gives pay cuts to what the market deems to be overpaid people. That's why we have income stratification. There is weak demand for unskilled and semi skilled labor so that class of employee isn't seeing raises that come anywhere close to tracking the inflation rate. Most people in the top-25% of the labor force are seeing raises that at least track the inflation rate since they're in more demand.

The national minimum wage in 1968 was, in 2018 dollars, about $10.25/hour. That's what the least skilled worker in flyover country was making. It's the bottom half of the labor force that sees the real impact of inflation.
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Old 01-10-2018, 05:35 PM
 
7,279 posts, read 8,112,371 times
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Quote:
Originally Posted by lchoro View Post
And much of the increase in output part of productivity is due to much looser financial conditions. Once they looked at only the labor part of productivity, it turned out that there was no real difference. It was a myth pushed by Greenspan in the late 90's to justify the case for lower interest rates. The reality was that the Fed had an agreement with Japan for them to purchase US treasuries to keep down interest rates.
I don't know what you are talking about.
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Old 01-10-2018, 06:31 PM
 
7,279 posts, read 8,112,371 times
Reputation: 5366
Quote:
Originally Posted by Jobster View Post
Yes, but if you look at the numbers, it's all a big lie.

There are no major discoveries anymore. A billion barrels is considered a major discovery these days, but it takes about 10 years to extract, and you will only recover about 25%.

That lasts a few days in the global economy.

The fact is, tight oil production/fracking etc, is considered unconventional oil sources. The reason we are searching for these sources is because there are less conventional sources. One look at the income statements from any tight oil producer will show you that this "technological miracle" is a bunch of BS.

Besides, I don't think people realize that the US does not have much oil that's economically viable.

The majority of it is shale which is literally an oil soaked rock, which is not the same as tight oil production which is far less expensive, but the depletion rates are extremely high.

When you get an opportunity, read about the Bakken and Permian fields and their decline rates.

Additionally, a 2014 Wikileaks report, showed where the Saudi's over-reported their oil by at least 40%. That was PRIOR to the MASSIVE production uptick at the end of 2014.

And despite green energy becoming more popular, global demand for oil is RISING.

Not sure why the US didn't do anything about this 20 years ago when they had the chance.

Now, no chance.

Worse, our politicians want to start a proxy war with the Russians who have about 60 years of oil when the US has about 5 at best. Good luck with that.
Listen I'm not going to argue with you much but I've been an economist in the oil business and an active O&G investor for a few decades now - your 5 year claim is simple gibberish. No one with any understanding of US O&G believes that. Well no one lacking an agenda anyway. BTW re: your Bakken/Permian claims Oct. 2017 was the top month for Texas oil production ever at 116,792,000 bbls. 2017 may just prove to be a better production year than 2015. 2018 will almost certainly set a new record. US oil production in Oct. was 9,637,000 bbls/day not quite a record (production highs were in the early '70s then way down from there until recently).
It's just the way O&G is - a place does not go from record or very near record production in a fairly tough price environment to economically dry in 5 years.
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Old 01-11-2018, 12:04 PM
Status: "delete" (set 20 days ago)
 
3,189 posts, read 1,273,221 times
Reputation: 2351
Quote:
Originally Posted by EDS_ View Post
Listen I'm not going to argue with you much but I've been an economist in the oil business and an active O&G investor for a few decades now - your 5 year claim is simple gibberish. No one with any understanding of US O&G believes that. Well no one lacking an agenda anyway. BTW re: your Bakken/Permian claims Oct. 2017 was the top month for Texas oil production ever at 116,792,000 bbls. 2017 may just prove to be a better production year than 2015. 2018 will almost certainly set a new record. US oil production in Oct. was 9,637,000 bbls/day not quite a record (production highs were in the early '70s then way down from there until recently).
It's just the way O&G is - a place does not go from record or very near record production in a fairly tough price environment to economically dry in 5 years.
Can you provide me with a better chart?



Because this is the one your government provided.

Maybe you can give me instances of some recent discoveries that contrasts this information.

Additionally your last statement is absurd if you consider the depletion rates for horizontal drilling. I don't even see how you can make a statement like that when they are notorious for rapid depletion, then there is the cost of disposal.

https://www.iadd-intl.org/articles/f...mer-exec-says/

Additionally, if everything is so amazing for tight oil producers it's a sustainable industry, just give me an example of even one producer who's financials don't look as if they are covered in blood.

https://www.economist.com/news/busin...spree-americas

Oh, what about the IOC's.

They are so profitable with their upstream production, right?

WRONG.

https://www.ft.com/content/c43b55c4-...2-5661783e5589

"Exxon said it lost $238m on oil and gas production in the US, while Chevron lost $26m."

Ouch.

And there isn't ONE SINGLE IOC that makes a profit on production. NOT ONE.

They also suspended the development of any additional infrastructure, so explain to me what's going to happen when those essentially bankrupt tight oil producers default?

And for the record, just because you're an oil economist, doesn't mean you're right. I've lost plenty of money listening to oil economists like Stephen Kopits, so unless you can dispute the financials and the depletion rates, it doesn't matter if production is up.

Production is up because they have to produce as much as possible to pay their interest payments, but given the depletion rates on horizontal drilling, the numbers from this year have no bearing on the numbers next year, as they could be reduced dramatically.

So, your own government reports that your oil reserves are in decline. Over 90% of producers are bleeding out of their eyeballs, infrastructure has been delayed by IOCs, there are no more major discoveries, we are using more oil that at any time in history, and the depletion rates for horizontal frackers is extreme. So you do the math.

Also, there is a thread where I actually did the math on oil based on the numbers YOUR government released. Based on our consumption, I calculated that the US has approx 5 years of oil, IF we were to rely on our own resources, and that discounts that only a certain percentage of that oil can be extracted.

Last edited by Jobster; 01-11-2018 at 12:23 PM..
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