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Oh really? What about Bernanke's recent statement about restarting another round of QE albeit a more modest one. Gee, could that be the ongoing MBS dollar roll and coupon swap transactions by the Fed?
The FED has not announced another round of QE, rather they announced that they would maintain their balance sheet at its current size. Payments on existing debt will be rolled over into new debt purchases mostly in non-mortgage related securities.
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Originally Posted by POhdNcrzy
In any case, the Fed drastically altered the MBS market and so far that market has not switched back to how it used to be
The FED undoubtedly altered the market 1-2 years ago, but the argument that its actions are still altering it today is rather weak. The fact remains, the FED stopped purchasing mortgage securities in March and mortgage rates are actually lower today than they were in March. If the fed's actions were drastically altering the MBS market today, you'd expect to see a shift upwards. Indeed, this is what many people were predicting but the predictions did not pan out.
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Originally Posted by POhdNcrzy
....obsessive-compulsive oppositional defiance.
Right, I'm obsessively defiant against poor logic and a lack of adherence to reality. Feel free to provide some rebuttals though. You started this thread over a year ago claiming that we'd see inflation, I claimed we would not. Who has been right? Me.
you have not been right by most americans cost of living increases ...im well up over last year in what my living costs are..why not take a poll, who is spending more the last 2 years then less...
i have one expense that dropped, my auto insurance.... everything from health insurance ,rent to taxes to utilities are way higher...
if your spending less to live more power to you but im sure the rest of us are not.
what would those cpi numbers be if the clinton administration didnt manipulate again how they were calculated and force them lower ...yeah i know tell us all it in fact was for the better...
want a true indicator of inflation..track a slice of pizza. for some reason that has been one of the most accurate indicators in the past...i dont know if it still is since i havent bought pizza in a while but over the last 2 years anyone know how much a slice went up? bet it didnt go down regardless.
Last edited by mathjak107; 09-14-2010 at 04:19 AM..
the jeans is not silly, its exactley what we do ...we have brand preferences,we have likes of different quality products etc..
Yes, many people do these sorts of things due to their underlying irrational buying behavior. But this has nothing to do with the accuracy of the CPI though, rather its a topic to be filed under marketing and branding.
Gap is a higher margin brand, very little of the price difference with k-mart jeans has anything to do with quality.
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Originally Posted by mathjak107
i remember reading that most major brands of peanut butter went up except 1 so the one that didnt go up was now put in the index. i would never buy that brand so for me peanut butter rose.
Really? Because this is not true. As can be seen by the link you provided the BLS does not use a single brand/type to determine the cost of an item, rather it takes the geometric mean of a collection of brands/types. If the majority of peanut butter brands increased, then that component of the CPI would increase. On the other hand if the brand you happened to prefer increased, but all others stayed the same there would be little increase in "peanut butter PI".
The primary reason CPI does not provide a good cost-of-living index for individuals is because individuals have brand loyalties. Companies spend millions, in some cases billions, to build this loyalty as it allows then to charge more for their products. If individuals were brand neutral then CPI would provide a good estimate for cost of living.
you have not been right by most americans cost of living increases ...im well up over last year in what my living costs are..why not take a poll, who is spending more the last 2 years then less...
Yes, I have. Most Americans cost of living has been stagnant over the last 1-2 years, some categories have increased while others have decreased. Its not just CPI that shows this, other price indexes so it as well. The people that claim otherwise never site statistically cogent results to demonstrate their point of view. For example, your suggesting of taking a non-random poll on a forum where the vast majority of people have not been rigorously tracking costs.
Personally I've only had one cost that has increased, namely health insurance. But that is partially due to increasing age, private insurance charges rates based on your age (they usually have brackets and when you get in a new one your rates go up 10~20%). Everything else has been stagnant or declined over the last ~2 years.
Regardless, whether or not the CPI is accurate has little barring on the financial markets. The government can't hide price increases, they are fairly easily measured by any large organization. The market believes that inflation is close to zero:
well if you believe that life is costing you less,and it really is then thats all that counts...i can tell you those numbers are no reflection for me...what about the rest of you out there?
i said the cpi is not a cost of living index its a price index and ill say it again its a manipulated price index that can and has been changed multiple times to raise or lower the results.
well if you believe that life is costing you less,and it really is then thats all that counts...i can tell you those numbers are no reflection for me...what about the rest of you out there?
Its not about you or me, CPI measures aggregate prices. Here is nothing inconsistent with stagnant aggregate prices, while some individuals experience increased costs and others decreased costs.
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Originally Posted by mathjak107
its a manipulated price index that can and has been changed multiple times to raise or lower the results.
Right, tin-foil haters interpret changes to CPI methodology as "manipulation" where in reality they were based on extensive research that showed that CPI was over stating price increases.
And to say it once again, I have never claimed that CPI is a cost of living index. The thread is about CPI and my comments to you were originally about CPI, would you stop obfuscating the issues by mentioning irrelevant things?
some times i think you are so busy arguing that you didnt even read what i origonally wrote....
i said that the cpi wasnt a cost of living indicator and should NOT be used as such.. what i said was a cost of living indicator is unique to each of us based on the price change x how many times you buy it x a quality or where it stands in a product line factor as higher end products you buy may have more of a price increase or price increases where lesser quality products may have gone down but thats unique to what a person buys...
its all very relavant and is why i gave the jeans example your so fixated on.....the jeans example is because i buy them and they went up...its real simple....
the cpi is only a MANIUPULATED price change index.it may not show much change but our own unique cost of living may have substaintial increases.
as far as substitutions your wrong... not to go into it in detail but the LASPEYRES indexing allows for substitions within catagory..
when steak is to expensive no they cant sub hamburger as hamburger is out of catagory.. but if flank steak goes up and reaches the price of fillet mignione that is a betterment substitutiuon that is allowed.... if both went up than no substitution is allowed.....
anyway we are going in a circle here.
Last edited by mathjak107; 09-14-2010 at 06:05 AM..
some times i think you are so busy arguing that you didnt even read what i origonally wrote....
To say it for the third time, I was not commenting on whether CPI is or is not a cost of living indicator. I quoted the comments by you that I was responding to, perhaps you should take a look:
At issues where your comments about CPI being "manipulated" and your inaccurate claim about its methodology. These were the things I was discussing, why you keep responding to me about cost of living is just nutty. If you can't keep track of a discussion, perhaps you shouldn't have them in the first place?
And yes we are full circle because instead of responding to what I was actually saying, you instead obfuscated the issue, and then returned to merely restate what I provided a rebuttal towards.
The FED has not announced another round of QE, rather they announced that they would maintain their balance sheet at its current size. Payments on existing debt will be rolled over into new debt purchases mostly in non-mortgage related securities...Feel free to provide some rebuttals though.
Well, User, I'm afraid you'll have to eat crow. I just heard it from former Fed Reserve governor Robert Heller interviewed on Bloomberg today that the "dollar roll and coupon swap" transactions I mentioned earlier have been used to purchase $28 billion worth of Treasuries so far in 2010. He said this was just them "keeping their tools primed and tested" for the upcoming larger QE2.
Interesting to note that the Japanese central bank's recently announced round of QE totals $60 billion and the market felt that was a lot of easing. But the US just "tests its tools" and that's $28 billion!
Seems to me this upcoming round of "QE2" really serves no purpose other than to replace foreign purchasers of Treasuries and keep our debt shell game going. Whenever that inflation finally hits (and it will), boy it's gonna suck.
What do you think the rise in equities is all about. The market's not stupid. They are piling into stocks because stocks values will surge along with the relatively large inflation that's coming soon. Mark Faber and Peter Schiff are hip to this game...
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