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As the links I posted note, they are not included in the core numbers the government and the Fed uses to argue that inflation is low.
It really makes no difference if the items are used in numbers the government doesn't base their actions upon.
CLEARLY, you've never done business budgeting or long term planning.
There's a REASON food and energy are not included in the core numbers - gas and food bounce around too much. The core numbers aren't just thrown out there for no reason - Federal, State and Local governments use that core number for fiscal planning purposes when trying to determine how much a long-term project is going to cost - likewise BUSINESSES use that number to estimate future costs. IF you include gas (for example) in the core number then your long-term estimates for future costs are going to vary WILDLY depending on the TIME of YEAR you make your budget plan - how much sense does THAT make? - NONE AT ALL. That's WHY the core inflation number doesn't include them - they are just tooooooo volatile for long-term planning - shooting up one quarter then collapsing the next - consequently they USELESS for planning purposes - so the government provides BOTH core inflation and full inflation numbers. That way folks have a choice of which number is more useful to them.
Not only that, but the fact is - in regards to energy at least - when energy prices rise consistantly over any period of time those increases in energy costs end up being reflected in OTHER costs - since nearly everything requires transportation and when gas prices are up for any extended period of time that increased cost gets passed on to the products being transported - so consequently, IF a gas price increase is more or less permanent it ends up reflected in the core inflation number anyway so the fact that gas prices aren't included in the core directly is not really that big a deal - since if gas surges short term one SHOULDN'T factor it in for future planning costs and if gas surges and then STAYS high that increased cost is captured in the core CPI number anyway (through the increased cost of OTHER items which rose in price because of the higher transportation costs).
As I said, there's a REASON the core CPI doesn't include those highly volatile costs. Any who WANTS those numbers included can simply look at the full CPI number - which DOES include those.
Housing, food, energy are too volatile to be included.
I've always laughed at that because Americans can't exclude those items in our budgets.
Core CPI is not how Americans live.
Then don't look at the Core CPI - look at the full CPI.
Nobody is MAKING YOU just look at the Core CPI.
Neither one shows particularly high inflation. The full CPI number simply bounces around a lot more - one need only look at what gas prices do in the summer vs winter to realize that - or look at what heating oil does in those seasons.
It always surprises me how silly it is for people to hedge their bet on a currency backed by nothing but the faith that it's valuable.
Um, GOLD is backed by nothing but the faith that it's valuable (or more precisely, backed by nothing but the faith that ONLY gold is valuable - and that fiat currencies are not. As that faith collapses so does gold).
Ken
Last edited by LordBalfor; 04-14-2013 at 08:34 PM..
And now gold just dumped ANOTHER 4% - down to $1442.00. It's fallen so low now, it's starting to affect mining stocks. At SOME POINT it will find a bottom, but the question is: "WHERE?" (and of course "WHEN?")
I remember back in 2011 when articles began appearing about gold-dispensing ATM's and businesses accepting gold as payment; that should have been a sign that the end was near. I know coworkers that bought physical silver near the peak in 2011 and the irrational exuberance they displayed as they tried to convince me to do the same ("silver to $100!!"). I warned them that once the big players get out of gold and silver, the ride up will be over. Well, it took a bit longer than I expected, but it seems we are seeing the early stages of the institutional exodus.
Ten years from now we are going to look back on this time like we look back on the irrationality of the tech bubble.
According to pre-market reports it will dive another $100 today.
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