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The CPI was, and I stress WAS, a measure of what it took to maintain a constant standard of living.
Who do you know that doesn't need food or energy ?
Prices go up and down too much for inclusion in the official CPI.
Well we don't have that luxury of not including them. If the price is up we pay. If the price is down we pay. And currently food/energy is taking a bigger chunk of everyone's paycheck.
Quote:
The CPI chart on the home page reflects our estimate of inflation for today as if it were calculated the same way it was in 1990.
Quote:
In general terms, methodological shifts in government reporting have depressed reported inflation, moving the concept of the CPI away from being a measure of the cost of living needed to maintain a constant standard of living.
Thanks for sharing this chart Happy Texan.
I'll be sure to pass it around to other people I know.
It will be an eye opener for some that will be able to look past the smoke and mirrors being put out to us.
The Gov't calculates 'Inflation' based upon the calculation which does NOT include food and energy, as is clearly stated.
No it doesn't. The government utilizes CPI-W or CPI-U to make adjustments for inflation, both of these measures include food and energy. Core inflation is primary used in monetary policy, it is the most important number to track for that purpose.
You need to brush up on your reading comprehension.
The Gov't calculates 'Inflation' based upon the calculation which does NOT include food and energy, as is clearly stated.
LOL... What?
I have had my share of disagreements with User_ID, but you're the one who's wrong this time.
The number quoted in the media is the CPI-U, which includes food & energy. The often state the "core" rate as well, which doesn't include food & energy.
See below:
The headline consumer price index rose 1.5% during 2010, while the core CPI, which excludes food and energy, was up only 0.8%.
Are you not going to make a comparison with other currencies? Because that would be disingenuous and incredibly misleading if you don't.
You have a point that all currencies depreciate. However, this wasn't true before the 20th century, at least in the US. Up until the 1930s, the US experienced regular preiods of inflation and deflation. Then the Federal Reserve got more heavily involved in the economy, and now deflation is rare or nonexistent.
I don't see what's ridiculous about it. It's true. Before the Federal Reserve got heavily involved in the US economy in the 1940s, long term inflation was 0. There were periods of inflation and deflation. Now, deflation is rare or nonexistent.
I have had my share of disagreements with User_ID, but you're the one who's wrong this time.
The number quoted in the media is the CPI-U, which includes food & energy. The often state the "core" rate as well, which doesn't include food & energy.
See below:
The headline consumer price index rose 1.5% during 2010, while the core CPI, which excludes food and energy, was up only 0.8%.
Since the 1970s, core inflation
has typically been measured by excluding
food and energy from the basket
of goods.
Canada, but connected... and the economic but is the same...
Hiding inflation - FP Comment (http://network.nationalpost.com/NP/blogs/fpcomment/archive/2010/04/28/hiding-inflation.aspx - broken link)
Quote:
For the last 150 years, most of the changes in methods to measure inflation involved fine-tuning on the three themes of quality, proportion and composition. That changed on October 17 1973, with the OPEC oil embargo. The surge in the price of oil had a striking effect upon inflation in the industrial nations.
Arthur Burns, who was then the chairman of the US Federal Reserve, asked the Fed’s economists to strip out energy prices from the CPI so he could get a measure of the “underlying trend” in prices, unaffected by what was then believed to be a temporary price shock. When food prices then rose sharply, they stripped those out — followed by used cars, children’s toys, jewellery, housing and so on, until around half the CPI basket was excluded because it was supposedly “distorted” by exogenous forces. This led to the development of “core inflation,” which is the CPI less energy and food prices.
The BLS made further major changes in 1978, 1987, 1995 and 1998. Government statistical agencies around the world copied them. It’s not hard to see why. [LEFT]
Read more: Hiding inflation - FP Comment (http://network.nationalpost.com/NP/blogs/fpcomment/archive/2010/04/28/hiding-inflation.aspx#ixzz1DulNFpHE - broken link)
[/LEFT]
I am fully aware that I just like anyone else can be wrong. But please show me rather than just tell me so that I can learn.
I see no point with comparing the USD to other, insolvent currencies, because despite the posters comments... that is largely irrelevant.
It pertains to trade, but not to economic health.
As to having been paid less to match the lower prices years ago:
Other than forgetting that wages do not rise as fast as inflation (So you are eternally 'falling farther behind' the poster forgets that with higher wages (Which give you LESS purchasing power) tax %'s go UP.
Taking a larger % of your income.
There is a reason that inflation is called a 'tax on the working man'
I have had my share of disagreements with User_ID, but you're the one who's wrong this time.
The number quoted in the media is the CPI-U, which includes food & energy. The often state the "core" rate as well, which doesn't include food & energy.
See below:
The headline consumer price index rose 1.5% during 2010, while the core CPI, which excludes food and energy, was up only 0.8%.
Two measures of inflation are often reported: Core CPI, which does not include food and energy cost, and non-core CPI, which includes everything. Core CPI is important because this is what the Federal Reserve looks at to decide whether or not to raise the Fed Funds rate. The Fed uses the Core CPI because food and energy, specifically gasoline, are so volatile and the Fed's tools are so slow-acting. Therefore, inflation could be high if gas prices have increased dramatically, but the Fed won't react until those increases trickle through to the prices of other goods and services.
(Shrugs)
I'd appreciate the explanation.
-Note, I did see where he didn't tried to change the argument and address inflation, but claimed' what is reported'... is that your point of contention?
My concern is inflation. Not what the media says from day to day. I learned in Iraq that what the Media reported were ether lies, misinformation, incorrect, or just plain BS.
I read the newspaper every day in High school. Haven't read one in years.
I'm apparently missing something. Please explain.
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