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Old 05-11-2010, 08:35 AM
 
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Owner equivalent rent (OER) is a fiction. It lagged real housing inflation for 10 years. In 2002-2005 when housing prices doubled, OER was barely up 3 pct each year. It would take a long time before the two would be in synch.

Quality clothes have gone up in price. Crap is cheap, and some of the better products have gone in quality. I think they've downsized shoes and socks. In the last two years, I'm finding that I have to now buy 1 size larger shoe and the one size fits all socks no longer fit me. They also seem to be cutting corners on the padding for socks and shoe inserts so they no longer provide the cushioning they used to. The higher end shoes and socks have all gone up huge in price. The thick Thor Lo running socks are now about 15 dollars a pair.
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Old 05-11-2010, 10:53 AM
 
Location: 3rd Rock fts
749 posts, read 1,004,804 times
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Quote:
Originally Posted by Ichoro
Used car prices are up about 20 percent.
Good one & nice to hear. Help the local businessperson & pretty much guarantee that the money will be spent locally. The County gets some gravy also (sales taxes from multiple sources).

Mircea, you got me all wrong. I’ve known for a l-o-n-g- time about the negative effects of prolonged low interest rates! As for Real Estate, the interest rates are low because there’s no demand. When there’s no demand & oversupply prices are suppose to drop! Because there’s a surplus of homeowners with no/negative equity in their house the Gov’t is reluctant to let housing prices adjust/correct downward.

Quote:
You don't seriously believe you're getting "0% financing" do you? You're being charged interest. It's built into the price of the car.
Again, you got me all wrong; I never financed anything in my life.

Quote:
Originally Posted by DSOs
As for the necessities in life (food, water, gas/oil, etc…), these are also inflating/regulated because of population increase coupled with diminishing recourses (sp-resources)……. Mircea reply: That's cost inflation. The only course of action is to increase production/supply or reduce consumption.
This is what irks me when people criticize Inflation. As people multiply & use more resources the cost of sustaining Life goes up—Inflation!
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Old 05-11-2010, 11:45 AM
 
Location: Wherabouts Unknown!
7,794 posts, read 17,546,289 times
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DSOs wrote:
This is what irks me when people criticize Inflation. As people multiply & use more resources the cost of sustaining Life goes up—Inflation!
For better or worse, it's human nature to criticize inflation because it appears to make our lives more difficult. Most human beings ( at least the ones I know ) prefer comfort and ease to struggle and difficulty. When we notice prices going up and wages stagnating, we quite naturally anticipate having to work harder to maintain what we have. Most of us don't want to do that. We enjoy the comforts we have, and we are reluctant to give up any of them. People multipling and the inflation it causes, strikes fear into our hearts because we have been brainwashed into a belief in scarcity. FEAR is an even deeper cause of inflation than population increase.
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Old 05-11-2010, 12:16 PM
 
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Money multiplying is the culprit. It's making inflation high and interest rates low.

The mortgage problem probably could've been solved if they gave the bailout money to all homeowners. It would equate to at least 30 percent of value of all the mortgage debt (9 trillion dollars). Apply a 30 percent haircut to all homes to bring them down to near fair value and refinance all the homes. The banks would get the cash for the deficiency in the home equity. The homeowners would get an affordable payment schedule.
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Old 05-11-2010, 02:05 PM
 
5,617 posts, read 14,317,062 times
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Quote:
Originally Posted by floridasandy View Post
i notice that i can't jam myself into size 3 pants now so i think that clothes are shrinking too.
I really love your posts. Your smart, funny and just such a pleasure. I wish more people were like you!! Your really a pleasure. stevemorse aka Marilyn!!!
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Old 05-13-2010, 01:54 AM
 
Location: Conejo Valley, CA
12,470 posts, read 18,191,546 times
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Quote:
Originally Posted by lchoro View Post
Owner equivalent rent (OER) is a fiction. It lagged real housing inflation for 10 years. In 2002-2005 when housing prices doubled, OER was barely up 3 pct each year. It would take a long time before the two would be in synch.
Sure, its not the best method for calculating housing costs. But using the price of homes is not all that great either.

If you use housing prices (via the case shiller index) instead of OER than things are much more deflationary than the CPI would indicate. Truth is
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Old 05-13-2010, 02:00 AM
 
Location: Conejo Valley, CA
12,470 posts, read 18,191,546 times
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Quote:
Originally Posted by DSOs View Post
This is what irks me when people criticize Inflation. As people multiply & use more resources the cost of sustaining Life goes up—Inflation!
Population growth does not result in inflation, if the supply of money was held constant than the currency would devalue as the population grew. Also, increased demand of some product will only result in an increase in price compared to other product classes if the demand is not meet with an increase in supply. Increases in productivity keep prices down, in fact things like food are much cheaper in real terms today than they were 50 years ago.

Inflation is a monetary phenomena, its created by the FED and its member banks. Nothing natural about it.
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Old 05-13-2010, 07:08 AM
 
Location: 3rd Rock fts
749 posts, read 1,004,804 times
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Quote:
Originally Posted by user_id
Population growth does not result in inflation, if the supply of money was held constant than the currency would devalue as the population grew.
Is this a trick question? That’s right, so increase the money supply (inflation) to adjust/reflect/keep up with population growth.

IMHO ‘shrinkage’ of products is a reaction to increase in demand (arguably population increase only). Because of population increase manufacturing & transporting capabilities (supply) are becoming more expensive/laborious to maintain even with advanced technology!
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Old 05-13-2010, 09:54 AM
 
Location: 3rd Rock fts
749 posts, read 1,004,804 times
Reputation: 304
Okay so I miss-typed.. What other choice does the Fed/Gov’t have besides printing money. Because of prolonged low interest rates there’s too much debt & not enough liquid/real money.

I would like to hear more before I dismiss that an increase in population doesn’t contribute/cause inflation. We have 300+ million people who are using resources that represent 1 billion people (just an example). The world is going to reach Peak-population/consumption soon enough & this is a major, underlying reason for today’s financial troubles IMHO.

Disclosure: Instead of printing money, I’d rather see a crashing correction with lessons lived & learned.
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Old 05-13-2010, 05:42 PM
 
10,707 posts, read 8,787,890 times
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Quote:
Originally Posted by user_id View Post
Sure, its not the best method for calculating housing costs. But using the price of homes is not all that great either.

If you use housing prices (via the case shiller index) instead of OER than things are much more deflationary than the CPI would indicate. Truth is
I think you would've had higher interest rates in 2002-2005 and avoided the bubble for the most part. If there was a decrease in housing prices in 2005 or 2006, it would've shown up in the CPI and rates would've declined sooner.

The Fed has been using interest rates to stimulate cash-out refi's to spur spending in recessions for the last 20 years. That tool should not have been used so aggressively by the Fed. It's a path to impoverishment to encourage people to mortgage their homes to the hilt.
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