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Old 04-04-2008, 05:05 PM   #41
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Id watch Barbarus he might be waiting for the Fed to bail out his hat business.
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Old 04-04-2008, 05:24 PM   #42
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twaddle my COL has indeed almost doubled in nominal terms since '98. Probably would have MORE than doubled as I don't buy any of the fancy office clothes/shoes I did before.. and I maxed out long ago on purchases like appliances and other home goods. In 1998 also used to be able to save out of my yearly figure. Biggest expenses now = energy and food. Not that much room anymore for hedonic adjustment there. Clif, who cares about the price of big-screen TVs, really... come on.

I just watched an interesting lecture on consumption habits 1970-2000s; will post a new thread.

About 20 years ago I bought a 35" inch tube TV for $2K last year I bought a 37" TV (the audio on the old one was dying) for $1K. If this one lasts for another 20 years that is a savings of $50/year. When you factor in the electricity savings $25/year for mainland people. $50 for me in Hawaii and probably you in Italy.

Now lets compare this to everybody favorite bitch gasoline. If you drive 10K miles year with a car that gets 20 MPG you consume 500 gallons. So my $100 year TV saving negates a $.20 increase in gas cost.

Ok so you don't buy a TV every year neither do I (obviously). I do buy some gadget most every year and the $100-$300 savings makes up for a lot of price hikes in commodities.

Communication cost is another area. It was not that long ago I was paying about $65-70 for a local+ long distance telephone. I canceled my land line and got a cell phone which I was spending about $75 month. A couple of years ago I switched to a family plan and now my total telephone bill is $45. The $360 saving pays for a lot of hikes in gas, milk, and food. Plus it doesn't even begin to account for the convenience and savings (no need to use hotel phones, pay phones, or waste gas driving around looking for someplace.) that go with having a mobile phone.

In your case, I suspect much of your COL is do to the weak dollar more so than inflation.
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Old 04-04-2008, 05:29 PM   #43
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while still waiting to find out what would be a "fair" rate of inflation, it occurs to me that perhaps a new "core" CPI is needed: all goods and services less food, energy and tinfoil?
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Old 04-04-2008, 05:34 PM   #44
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I canceled my land line and got a cell phone which I was spending about $75 month. A couple of years ago I switched to a family plan and now my total telephone bill is $45.
Which cell phone provider has a family plan for $45/mo? We are looking at taking the plunge and dropping our land line. Verizon's cheapest plan with 700 minutes is $69.95/mo - 2 lines; $79.95/mo - 3 lines; $89.95/mo -4 lines; plus a lot of tax.
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Old 04-04-2008, 05:41 PM   #45
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Which cell phone provider has a family plan for $45/mo? We are looking at taking the plunge and dropping our land line. Verizon's cheapest plan with 700 minutes is $69.95/mo - 2 lines; $79.95/mo - 3 lines; $89.95/mo -4 lines; plus a lot of tax.
I am on Verizon with my sister,her husband, my mom, her boyfriend, 5 lines 1400 minute, we split 3 ways $43 each including tax. Sister lives in Hawaii, Mom in rural Oregon. We could get by on 700 minutes since the other two have land lines and most of my friends are on verizon.
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Old 04-04-2008, 05:59 PM   #46
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real or nominal?
Nomireal.
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Old 04-04-2008, 06:15 PM   #47
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Yahbut Clif...how much does the TV cost that you REALLY want to buy now vs the one you really wanted to buy 20 years ago? Plus I think you'll find that new tv wont last as long as the old one did.

On another tack, people really didnt HAVE to have all the electronic stuff 15-20 years ago. While its certainly not a necessity, one really oughta have a computer, a high speed internet connection, a cell phone, and cable or satellite television service to go with their big screen and home theater.

Twenty years ago you had a ma bell phone, you never called anyone long distance unless it was a holiday or an emergency, and you had a 19" set hooked up to rabbit ears with a tinfoil bowtie on one of the antenna rods. Only massive nerds had computers and they didnt do much of anything useful.

Sooo...some things are cheaper now, but more things may have become essential in our lives.

Inflation of lifestyle, inflation of costs, reductions in quality of products and services...

Can we really say we're getting customer support as good as what we got 20-30-40 years ago? I'm generally shocked when someone actually gives me good support or acts like they give a hoot.
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Old 04-04-2008, 06:37 PM   #48
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Is the quality of TV sets going down? Has anybody had their LCD TV die on them? Vertical hold not holding? Rabbit ears too hard to adjust?

FWIW, the LCD from my 1984 laptop still works. It's a crappy monochrome non-backlit LCD, but it never seems to have problems working.

And I think the reason people are driving their cars longer is that the quality has actually improved over time. Shocking!

Now here's some data to argue with from the BLS:

Televisions (adjusted for constant quality, remember)

1998: 60.1
2007: 15.35
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Old 04-04-2008, 07:36 PM   #49
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In my case, probably not usual, I had a hand made cabinet for 35" tube TV which I replaced with biggest LCD 37" that would fit, so the $1K was all I wanted to spend.
I have no intention of replacing it until it dies, which I expect to be at least 10 and probably 20 years.

It is more expensive to repair cars now than it use to be but other than routine maintaince I don't even repair mine once a year since the turn of the century. Back in the 80s, even with Hondas, several times a year something would break, and wasn't just me people constantly had cars in the shop. The savings in time and money associated in more reliable, and safer transportation AFAIK aren't measured but they are real.

If you want argue that yesterdays luxury's are now considered today's necessities, I'll agree. But it isn't just electronics goods. For example Pre wash hyrdophonically grown lettuce wasn't available in winter 25 years ago, nor a bunch of other convience foods, fresh fish/suishi in middle of the country was very expensive. I am pretty sure the BLS basket of goods evolves over time and the quality general improves. Although the improvements are probably subtle my 35" tubeTV vs more energy efficient HD 37" LCD, pre washed lettuce mix vs iceberg lettuce.

So I think CPI overstates the actual cost of maintaining a constant lifestyle, although perhaps understands the cost of keeping up with the Jones.


After all America is the only country in the world poor people are fat, and rich people spend tons of money trying to be thin.
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Old 04-04-2008, 08:55 PM   #50
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...and fat people get handicapped plates so they can park up front and not have to walk very far...

WTF?!?
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Old 04-04-2008, 09:07 PM   #51
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while still waiting to find out what would be a "fair" rate of inflation, it occurs to me that perhaps a new "core" CPI is needed: all goods and services less food, energy and tinfoil?
A fair rate would be the actual rate of increase in the cost of living (the loss of purchasing power) for the average citizen, not fudged by ideas such as Boskinizing. That would likely be around 7% today. The government would be forced to pay around 9% on TIPS, our standard tax deduction would be increasing 7% a year, and those on Social Security would be getting 7% a year to meet their increases costs. If they had to pay out what they owe, they wouldn't be as free to be spending money they don't have on every new thing that comes along. I'd call that fair.

Before you blast me, remember 91% of Americans think you are wrong when you do. It's must be nice to be so sure you are right even though only 9% agree with you. Who should be buying the hats?
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Old 04-04-2008, 09:20 PM   #52
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A fair rate would be the actual rate of increase in the cost of living (the loss of purchasing power) for the average citizen, not fudged by ideas such as Boskinizing. That would likely be around 7% today. The government would be forced to pay around 9% on TIPS, our standard tax deduction would be increasing 7% a year, and those on Social Security would be getting 7% a year to meet their increases costs. If they had to pay out what they owe, they wouldn't be as free to be spending money they don't have on every new thing that comes along. I'd call that fair.

Before you blast me, remember 91% of Americans think you are wrong when you do. It's must be nice to be so sure you are right even though only 9% agree with you. Who should be buying the hats?
42.7% of all statistics are made up on the spot
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Old 04-04-2008, 09:21 PM   #53
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I thought it was 92.545%?
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Old 04-04-2008, 09:22 PM   #54
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42.7% of all statistics are made up on the spot
That sounds tinfoilish
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Old 04-04-2008, 09:25 PM   #55
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I've constructed what I think is a fair inflation index. I call it the CFB index. It assumes you consume 50% bacon and 50% whiskey.

Bacon:

1998: 99.1
2007: 126.273

Whiskey:

1998: 151.5
2007: 183.048

CFB index:

1998: 125.3
2007: 154.66

CFB index is up 23% over 10 years, or about 2%/year. CFB will do fine with a 100% TIPS portfolio.

Since ladelfina consumes pure energy, her inflation rate is 8%/year. However, had she had a proper investment allocation, she would hedge her costs with something like Vanguard's energy fund, which is up 17%/year over the last 10 years.

So invest like you consume, and you should do fine.
Your numbers are suspect... we all know that you can't exist on ONLY 50% whiskey. ... talk about cooking the books
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Old 04-04-2008, 09:27 PM   #56
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I dont drink whiskey either. So the whole premise is more than 50% flawed.
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Old 04-04-2008, 09:32 PM   #57
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I dont drink whiskey either. So the whole premise is more than 50% flawed.
cfb ... I meant it was too low
... we need a tongue in cheek emoticon.
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Old 04-04-2008, 09:39 PM   #58
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I need an automatic winkie on all my posts.

Go ahead...make your own joke!
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Old 04-04-2008, 11:11 PM   #59
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I need an automatic winkie on all my posts.

Go ahead...make your own joke!
gotcha ... slowing in my old age ...
hmmm maybe retirement is detrimental to ones abilities .... NAH
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Old 04-04-2008, 11:28 PM   #60
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Its slinky its slinky
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