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Old 01-18-2008, 09:50 AM
 
Location: Urbana, IL
84 posts, read 256,511 times
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What does everyone think the real rate of inflation is? IMO the government
underreports this figure and has been doing so for years. In books such as
"The Demise of the Dollar" by Addison Wiggins, the underreported rate typically runs 150-200 basis points over the stated rate. Seems a bit low to me

mark
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Old 01-18-2008, 10:50 AM
 
Location: western East Roman Empire
8,067 posts, read 11,865,979 times
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Quote:
Originally Posted by chambana View Post
What does everyone think the real rate of inflation is? IMO the government
underreports this figure and has been doing so for years. In books such as
"The Demise of the Dollar" by Addison Wiggins, the underreported rate typically runs 150-200 basis points over the stated rate. Seems a bit low to me

mark
The government does not under-report inflation. The government lies about inflation.

What is money? The means of exchange, the unit of account, and the store of value.

Governments have lied about the nature of money, and inflation, since they invented it about 2,500 years ago, the US is no exception.

Having said that, I'd say inflation is running anywhere from 7% to 10%.

The only way to know for sure the real rate of inflation is to take your own basket of goods and services - and I am sure that includes at least food and energy, which the government conveniently strips out, and does not include a lot of consumer junk from China, that the government conveniently adds in - and follow prices for them on a monthly and yearly basis.
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Old 01-18-2008, 11:21 AM
 
123 posts, read 82,414 times
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Quote:
Originally Posted by bale002 View Post
The government does not under-report inflation. The government lies about inflation.

What is money? The means of exchange, the unit of account, and the store of value.

Governments have lied about the nature of money, and inflation, since they invented it about 2,500 years ago, the US is no exception.

Having said that, I'd say inflation is running anywhere from 7% to 10%.

The only way to know for sure the real rate of inflation is to take your own basket of goods and services - and I am sure that includes at least food and energy, which the government conveniently strips out, and does not include a lot of consumer junk from China, that the government conveniently adds in - and follow prices for them on a monthly and yearly basis.
125% correct.

Example of how they compute (assuming food was part of inflation):

Steak inflates at 25%
Feta cheese inflates at 5%

Standard mean: (0.25 + 0.05) / 2 = 0.15
Geometric mean: sqrt(0.25 * 0.05) = 0.11

Also, hedonic adjustment:

If steak inflates at 25%, substitute with hamburger meat which inflated at 10%.
Feta at 5%? No problem, substitute with kraft singles processed cheese at 2%.

Now:
Regular mean: (0.10 + 0.02)/2 = 6%
Geometric mean: (0.10 + 0.02)/2 = 4.4%

See how I can make the numbers look better with some slight of hand?
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Old 01-18-2008, 12:23 PM
 
Location: WA
5,538 posts, read 22,638,746 times
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Inflation is different for each individual as many price fluctuations may have no affect on one person or family. There is NO ONE NUMBER that will describe inflation accurately for the whole population.

Since the combination of different audiences and seasonal fluctuations make it impossible to provide a monthly or quarterly number that is accurate the government chooses to provide a variety of numbers. The ones we see probably don't describe what we are seeing with our budgets.

Right now the government is reporting 4.1% for an overall number but for many of us that spend a notable percentage on health care, local taxes, fuel, and groceries, it does seem to be low (my health insurance premium went up 23% this year alone!).

I really don't think they are intentionally lying but simply have methods that don't track what most of us are experiencing, and are too stuck in their own issues to change the system.
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Old 01-18-2008, 12:27 PM
 
123 posts, read 82,414 times
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Quote:
Originally Posted by cdelena View Post
Inflation is different for each individual as many price fluctuations may have no affect on one person or family. There is NO ONE NUMBER that will describe inflation accurately for the whole population.

Since the combination of different audiences and seasonal fluctuations make it impossible to provide a monthly or quarterly number that is accurate the government chooses to provide a variety of numbers. The ones we see probably don't describe what we are seeing with our budgets.

Right now the government is reporting 4.1% for an overall number but for many of us that spend a notable percentage on health care, local taxes, fuel, and groceries, it does seem to be low (my health insurance premium went up 23% this year alone!).

I really don't think they are intentionally lying but simply have methods that don't track what most of us are experiencing, and are too stuck in their own issues to change the system.
The standard for measuring inflation has been revised since the 70s. If the government used those standards under the current environment, they'd easily be reporting 10% or more inflation.

CPI-U is another standard and it will consistently show higher than the CPI now.

If you buy HDTVs by the truckload and take a chance on not having health care, I guess the CPI is applicable for yourself.
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Old 01-18-2008, 01:47 PM
 
Location: western East Roman Empire
8,067 posts, read 11,865,979 times
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Quote:
Originally Posted by cdelena View Post

I really don't think they are intentionally lying but ...
When you consider the massive social security and health care commitments on the one hand, and political promises on the other, they have to lie about inflation: the only way to maintain social security commitments, for example, including political promises to make cost-of-living adjustments, is to devalue the purchasing power of the pay-outs through real inflation that is higher than the COLAs.

And the social security commitment is only one instance of the disconnect between production and consumption plaguing the US economy now and going forward.
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Old 01-18-2008, 04:39 PM
 
3,698 posts, read 10,584,762 times
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I'm curious how much of the cost of inflation is due to merchant fees for credit and debit cards. If there is a higher percentage of card users buying stuff at the grocery store, then the store has to raise the prices to cover the percentage of fees charged to the merchants. Surely some of the inflation rate or at least the CPI is due to the rapid increase in the use of debit and credit cards.

I would like to see a law that requires merchants to directly charge the individual for the credit card transaction fees. If you pay cash, you don't have to pay it.
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Old 01-18-2008, 04:42 PM
 
123 posts, read 82,414 times
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Quote:
Originally Posted by sean98125 View Post
I'm curious how much of the cost of inflation is due to merchant fees for credit and debit cards. If there is a higher percentage of card users buying stuff at the grocery store, then the store has to raise the prices to cover the percentage of fees charged to the merchants. Surely some of the inflation rate or at least the CPI is due to the rapid increase in the use of debit and credit cards.

I would like to see a law that requires merchants to directly charge the individual for the credit card transaction fees. If you pay cash, you don't have to pay it.
Merchants allow the use of credit cards because it generates more business. Making a new law is just more micromangement of the economy. I would assert it accomplishes nothing and could be harmful.

The last thing we need is government meddling in the economy. They've done enough damage.
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Old 01-18-2008, 04:52 PM
 
3,698 posts, read 10,584,762 times
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Quote:
Originally Posted by Shazam72 View Post
Merchants allow the use of credit cards because it generates more business. Making a new law is just more micromangement of the economy. I would assert it accomplishes nothing and could be harmful.

The last thing we need is government meddling in the economy. They've done enough damage.
The business they are generating is contributing to the ever increasing amount of debt that is threatening our economy and stability. The merchant fees are causing inflationary price increases and are contributing the the loss or real wages over the past few years. Even if you pay cash for all of your purchases, you are getting less for your money now than you did ten years ago because merchants have to cover those fees.
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Old 01-18-2008, 05:11 PM
 
Location: WA
5,538 posts, read 22,638,746 times
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Quote:
Originally Posted by bale002 View Post
When you consider the massive social security and health care commitments on the one hand, and political promises on the other, they have to lie about inflation: the only way to maintain social security commitments, for example, including political promises to make cost-of-living adjustments, is to devalue the purchasing power of the pay-outs through real inflation that is higher than the COLAs.

And the social security commitment is only one instance of the disconnect between production and consumption plaguing the US economy now and going forward.
You are assuming a lot. Increased taxes and reduced benefits are also ways to solve or push the problem further into the future. They may be in denial, ignorant, are simply stupid, but they are not lying because that assumes a full understanding of the problem and an agenda to deceive, and I see neither. Congress has changed programs without worrying about details of past or future commitments many times and will continue to do so… and actually think they are doing a good job!
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