CPI, bald faced lies

[barbarus]

Originally Posted by REWahoo

Consumer Price Index Summary

Well that proves it!

Who am I to argue against facts like these.

And in tabular form too.

Happy Days Are Here Again

[Zathras]

Thank you REWahoo, I stand corrected!
My apologies for the faulty memory and information.

[cute fuzzy bunny]

REW is always good for a faulty memory...

[Independent]

Originally Posted by cute fuzzy bunny

Without thinking this through too much (why start a new trend?) how about making the housing component a function of:

% of US residents renting x (average rents + average renters insurance)
+
% of US residents owning x (average mortgage payments + average property tax + average homeowners insurance)

Or are the increases in taxes even comprehended by the CPI?

This seems reasonable to me, but it won't give Rockon the result that he wants.

First, the BLS already breaks housing into "renter" and "owner" pieces and does the weighting as you suggest.

Now, what happens on the owners part? Of course, the great majority of Americans don't buy new houses in any given year. Most of us have payments locked in from prior years, so for all those houses the official price change will be zero. Since there are so many of them, this approach will lag actual market house prices by a lot.

This approach also includes interest. Which, again, seems reasonable to me. So in the years when mortgage interest rates were falling, and people were refinancing, actual monthly payments were going down on a lot of houses that weren't changing hands.

I haven't done the math, but it's possible that in the years when market prices were going up sharply and interest rates were dropping sharply, the amount of refinancing would have completely offset the upward market prices. (The math would require comparing the numbers of people refinancing, and the percentage drop in their monthly payments, to the number of people buying new houses, and how much their payments exceeded the prior owners.)

I have trouble believing that this approach would have given a significantly bigger bump in the bubble years than the method the BLS actually used. Rockon doesn't get what he wants.

(A couple details, you said "average payments". To be perfect, that should be "average payments on a fixed sample of houses that doesn't change month-to-month". Also, I haven't said anything about ARMS, but they just act like automatic refinancing.)

[Independent]

Originally Posted by RockOn

I think the BLS fudging the reports to show low inflation gave "cover" for the FED to lower rates to 1% and leave them at 1% for way too long. During that whole period all I heard was "the FED doesn't have to worry about inflation, core inflation is barely positive" as house prices were spiking 20% a year (in some cases). Commodities were rising during that time, many breaking to new highs, it was ignored as we all supposedly switched from steak to chicken. War costs were also surging, spending overall was out of control. I think the FED obviously lacked in thought and judgement, the credit collapse proves that point.

I agree with Cute Fuzzy Bunny, that would be a fair way to do it. It would not be hard to figure out, if they wanted to be honest about it. It's a scam, I say.

I think there are two different claims here. One is that the Fed made the wrong move, the second is they were able to do what they wanted to do because the BLS gave them "cover".

I disagree on the second issue - the amount of "cover" they got or needed from the BLS numbers. I don't see any way for either of us to convince the other. The best facts would come from following Fed govenors around day after day, listening in on all their many discussions. I can't do that, so I'm making an educated guess.

[cute fuzzy bunny]

Originally Posted by Independent

Most of us have payments locked in from prior years, so for all those houses the official price change will be zero.

Sure, but we're looking for changes to the cost of living, not valuations, but then I'm one of those morons who thinks a cost of living index should just analyze cost of living, not the effects of changes to cost of living

(A couple details, you said "average payments". To be perfect, that should be "average payments on a fixed sample of houses that doesn't change month-to-month". Also, I haven't said anything about ARMS, but they just act like automatic refinancing.)

Nope, I'd show ALL of them as an average. I think theres plenty of data evident on the number and types and amounts of mortgages and rents paid. Sampling is fine as long as the samples are large and well distributed.

ARMs should be taken into consideration as well. Rising mortgage rates on an ARM = higher cost of living to the individual. Thats inflationary in terms of cost of living, just not inflationary on the dollar.

A non housing gripe on how the CPI fails as a "cost of living" adjustment can be provided by anyone on social security and medicare. They're receiving CPI based adjustments to their social security payments, and then rising medicare costs pretty much eat those up.

So they're not being adjusted for cost of living and inflation as it pertains to their cost. Health care through medicare is going up at a rate equal to the CPI all by itself, so they get nothing for the changes in food, energy, housing, etc.

Dang good thing they dont have to suffer that loss of buying power for 50 years...

[RockOn]

Originally Posted by cute fuzzy bunny

=
A non housing gripe on how the CPI fails as a "cost of living" adjustment can be provided by anyone on social security and medicare. They're receiving CPI based adjustments to their social security payments, and then rising medicare costs pretty much eat those up.

So they're not being adjusted for cost of living and inflation as it pertains to their cost. Health care through medicare is going up at a rate equal to the CPI all by itself, so they get nothing for the changes in food, energy, housing, etc.

Dang good thing they dont have to suffer that loss of buying power for 50 years...

Ditto, Ditto, and Ditto. Anyone ER'ing should beware, they have 40 years of getting hosed on COLA's ahead of them. Plug 5% for inflation in your plans instead of 3% and see what happens. Sorry I said I wouldn't comment.

[barbarus]

How' the price of dog food lately? I've been splurging on hamburger.

Can anybody comment on the taste of that pelletized stuff that you mix with water to get a kind of gravy?

[Notmuchlonger]

Originally Posted by barbarus

How' the price of dog food lately? I've been splurging on hamburger.

Can anybody comment on the taste of that pelletized stuff that you mix with water to get a kind of gravy?

Ive tried various kinds just for the hell of it. Its so damn dry even with water. That gives me an idea of maybe adding some olive oil or something to help wash it down. Dog biscuits suck too way too dry and grainy

[Patrick]

Originally Posted by Notmuchlonger

Ive tried various kinds just for the hell of it. Its so damn dry even with water. That gives me an idea of maybe adding some olive oil or something to help wash it down. Dog biscuits suck too way too dry and grainy

I hear the canned cat food is nice and moist.

[ladelfina]

Tender Vittles have a consistency that reminds me of Space Food Sticks.

[lswswein]

The Inflation Update

[Notmuchlonger]

Originally Posted by Patrick

I hear the canned cat food is nice and moist.

Only if I could afford the crackers. Like a little Pâté snack

[Notmuchlonger]

So CPI report was not too bad today. 4% total 2.4% excluding the usual suspects. What say you! Im not eating or using energy this month so ha!


In other news Reynolds is on sale

[Bestwifeever]

Thank God I turned off the heat and got my bicycle out for running errands and decided to drop 25 lbs. But the Dow is up 234 at this moment so all is well, I guess.

[RockOn]

Originally Posted by Notmuchlonger

So CPI report was not too bad today. 4% total 2.4% excluding the usual suspects. What say you! Im not eating or using energy this month so ha!

Just more Bald Faced lies, getting used to it. Still a joke, 2.4%

[OAG]

Can anyone explain the MOAA (COLA Watch) Chart to me? I thought we were 2.1% over the Sep 07 Base as of Mar 31 but MOAA say something like 1.9% and then goes on to say the Mar increase was .9% - totally confusing.

[ziggy29]

Originally Posted by Notmuchlonger

So CPI report was not too bad today. 4% total 2.4% excluding the usual suspects. What say you! Im not eating or using energy this month so ha!

Here's a question. If food and energy costs rise to the point where they are (say) 30% of a typical budget instead of 20%, will the CPI calculation increase the weighting of food and energy? If it doesn't, it's undercounting inflation.

And it doesn't much matter if big ticket electronic items are falling in price if most households can't buy them because they are spending all their money on food and gas...

[RockOn]

Originally Posted by ziggy29

it's undercounting inflation.

BINGO!!