Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Chicago Man Takes Exception To the Official Gvmt CPI
Old 09-29-2007, 08:28 PM   #1
Recycles dryer sheets
barbarus's Avatar
 
Join Date: Aug 2007
Posts: 433
Chicago Man Takes Exception To the Official Gvmt CPI

And so do I. One has to be aware of the natural tendency to only focus on rising prices while discounting those goods&services that are getting cheaper.
Never the less, it seems that the overall cost of living for the average person is substantially above the official figure.

Agree or disagree? Think carefully and dispassionately before responding please.

Bloomberg.com: News
__________________

__________________
barbarus is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 09-29-2007, 08:36 PM   #2
Thinks s/he gets paid by the post
twaddle's Avatar
 
Join Date: Jun 2006
Posts: 1,378
And why does it matter? If you're relying on social security checks, I guess it matters.

The market looks at the CPI as a macroeconomic indicator. The absolute value doesn't matter as much as the direction. If inflation is really much higher than the CPI, then we're all hosed. Our investments will fail to provide enough income to keep up with our expenses. But what can you do about it?
__________________

__________________
twaddle is offline   Reply With Quote
Old 09-29-2007, 09:41 PM   #3
Full time employment: Posting here.
Darryl's Avatar
 
Join Date: Mar 2007
Posts: 577
The taxing authorities have never felt the assessed value of my home decreased. I did win an appeal once a couple houses ago. we closed in October and in February I received my assessment I believe it was 25-35% over what I paid (sorry been about 15 yrs) I called to schedule my appeal and I tell the guy who answered the phone I want to schedule an appeal because my home is not worth anywhere near where they have it listed. He says well what are you basing your appeal on and I told him that I'm basing it on what I paid four months ago. He says oh, how much was that? I tell him and he said that was my new number I wouldn't need to come in.
Home maintenance okay, energy definitely, medical ouch, college in 6 yrs it starts ugh yeah it all feels like more than 2% to me.
__________________
I highjacked a rainbow and crashed into a pot of gold - Bon Jovi
Darryl is offline   Reply With Quote
Old 09-29-2007, 09:56 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,616
Quote:
Originally Posted by twaddle View Post
And why does it matter? If you're relying on social security checks, I guess it matters.
Or TIPS. Or I-Bonds. Or a COLAd pension. Or if you buy products made by workers with labor agreements tied to the government CPI.

As it happens, the govt has lots of incentives to understate inflation, and none whatsoever to call it fairly.

Where's CFB when we need him? Hey, he wouldn't have traveled to Chicago by any chance, would he?
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is online now   Reply With Quote
Old 09-29-2007, 10:17 PM   #5
Full time employment: Posting here.
Darryl's Avatar
 
Join Date: Mar 2007
Posts: 577
I think I saw a CFB post yesterday. He should be along shortly.
__________________
I highjacked a rainbow and crashed into a pot of gold - Bon Jovi
Darryl is offline   Reply With Quote
Old 09-29-2007, 11:37 PM   #6
Thinks s/he gets paid by the post
twaddle's Avatar
 
Join Date: Jun 2006
Posts: 1,378
Quote:
Originally Posted by samclem View Post
Or TIPS. Or I-Bonds. Or a COLAd pension. Or if you buy products made by workers with labor agreements tied to the government CPI.

As it happens, the govt has lots of incentives to understate inflation, and none whatsoever to call it fairly.

Where's CFB when we need him? Hey, he wouldn't have traveled to Chicago by any chance, would he?
The real yield on TIPS is around 2.5%. The CPI is around 2.5%. So, the TIPS total yield is around 5%. About the same as nominal bonds. Obviously, the market sets the yield on bonds, and apparently the market believes the CPI is pretty close. That's all that matters, right? If the market didn't believe in the CPI, then the "real" inflation rate would be factored into bonds and other investments, wouldn't it?

So, how about an inflation metric that isn't calculated based on the BLS's "basket of goods?" What would that tell us?

How about the GDP deflator?

GDP deflator - Wikipedia, the free encyclopedia



Hmm, looks like the CPI is actually a bit higher than the inflation metric prefered by most economists....
__________________
twaddle is offline   Reply With Quote
Old 09-30-2007, 02:47 AM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 13,290
Twaddle...

Would you stop confusing the issue with facts

don't you know our OPINION counts more
__________________
Texas Proud is offline   Reply With Quote
Old 09-30-2007, 09:46 AM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,616
Quote:
Originally Posted by twaddle View Post
The real yield on TIPS is around 2.5%. The CPI is around 2.5%. So, the TIPS total yield is around 5%. About the same as nominal bonds.

Wow, those bond traders aren't very smart. They could be getting 6% with a government backing at PENFED. Hmmh, just for grins . . . 6% minus 2.5% real yield would lead to an expected inflation amount of 3.5%, which is quite a bit higher than 2.5%.

But, I agree, that's not the standard way of clocking these things.
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is online now   Reply With Quote
Old 09-30-2007, 05:37 PM   #9
Recycles dryer sheets
 
Join Date: Jun 2007
Posts: 359
Due to the large number of fiscal tie-ins to CPI (SS, TIPS, other COLAs), the government has all kinds of vested interest to understate the true rate of inflation.
__________________

__________________
FinanceGeek is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Dublin/Columbus OH to Chicago IL OAG Travel Information 8 09-26-2007 10:51 AM
Chiggers Attack Chicago REWahoo Other topics 6 08-15-2007 12:43 PM
The Chicago convenience store incident tangomonster Other topics 8 07-06-2007 09:00 AM
RCN Chicago, signing out OldAgePensioner Other topics 20 04-21-2006 12:20 PM
Credit counselling in Chicago nfs Other topics 7 12-30-2005 03:10 PM

 

 
All times are GMT -6. The time now is 09:16 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.