Fortunes Tinfoil CPI

[RockOn]

I need help. Should I buy a tinfoil hat or buy food/gas for next week? Can't do both due to inflation.

That's really an easy decision. Buy the food and gas. With 91% of the population being forced to surrender their hats, you should see a little deflation on hats pretty soon.

 

[clifp]

Maybe somebody should show a plot prices of 35" TVs, Video game consoles, per minute charges for cell phones, laptop computers, video rentals, shoes. You know stuff that I buy instead of tons of tin and alumnium. Even something like gas hasn't gone up that much because I use less. 5 years ago my car got 15 MPG,now it is about 25 MPG. I drive the same but actual gas expense aren't any higher.

 

[RockOn]

Maybe somebody should show a plot prices of 35" TVs, Video game consoles, per minute charges for cell phones, laptop computers, video rentals, shoes. You know stuff that I buy instead of tons of tin and alumnium. Even something like gas hasn't gone up that much because I use less. 5 years ago my car got 15 MPG,now it is about 25 MPG. I drive the same but actual gas expense aren't any higher.

Give it up, you are the minority, majority rules. 9%, that's a pretty poor showing. Hill does better than that. Wait to you see how much a new shiny hat is going to cost you, don't cheap out and get the substitute either. I ponied up full price for mine. Boy was that was a mistake, who recommended I get one anyway?

 

[ladelfina]

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.

 

[twaddle]

ladelfina, would you believe that your government agrees with you?

I just ran a query on the BLS data from 1998-2008 for food and energy CPI-U components. If that's all you consumed, your COL has nearly doubled:

Energy

1998: 103.7
2007: 213.385

Food and beverages

1998: 160.3
2007: 205.4

The CPI-U assumes you consume other stuff, and that other stuff tends to bring the CPI down.

 

[ladelfina]

But but but.. I LBMM!! (splutter!) Fat lot of good that's done me!
I guess I SHOULD have been buying TVs every year so I could experience low inflation!!

 

[cute fuzzy bunny]

Shhh...I'm doing an experiment. I have a television in the oven braising in with some garlic, tomatoes and onions.

In about 4 hours I'll let you all know how it tastes.

As always when these things come up, I urge people to understand and determine their own changes to cost of living and invest accordingly. If your COL is going up 8% a year and you've invested so as to generate 5%...you're gonna be sorry in ten years. On the other hand, if your long term COL change is nearly zero and can remain there through endless changes to your buying habits, then you may not need to take as much risk as someone looking at 3%, 5% or 7% changes per year.

 

[ladelfina]

Right CFB.. from about 15 years ago to 5 years ago I did track expenses closely. They were not an indicator of the present state of the universe. To risk repeating the obvious, the biggest changes have come in fairly inescapable costs. Changing, or accurately projecting, buying habits only goes so far; the outside world has to play ball, too, for any set of assumptions to bear out.

 

[d]

... only 7% right now and for awhile now. That is not fair.

exactly what would be "fair"?

 

[twaddle]

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.

 

[Notmuchlonger]

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.

If I remember correctly you live in another country Ladelfina? Is it the same COL as in the US?

 

[barbarus]

I'm gonna MAKE me one of them tinfoil things.
You can't trust the commercial product. The FBI hides transmitters in'em. They steal your thoughts which are then absorbed by the nearest cellphone tower, which re-transmits 'em to that big mountain in Colorado, to be nd kept in big glass jars protected by Faraday cages made of chicken wire.




Is anyone buying this?

 

[brewer12345]

Is anyone buying this?

Dunno. How much?

 

[Patrick]

I'm gonna MAKE me one of them tinfoil things.
You can't trust the commercial product. The FBI hides transmitters in'em. They steal your thoughts which are then absorbed by the nearest cellphone tower, which re-transmits 'em to that big mountain in Colorado, to be nd kept in big glass jars protected by Faraday cages made of chicken wire.




Is anyone buying this?

I'll buy it for a -2% effective interest rate . . .

 

[d]

real or nominal?

 

[Notmuchlonger]

Id watch Barbarus he might be waiting for the Fed to bail out his hat business.

 

[clifp]

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.

 

[d]

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?

 

[packrat44]

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.

 

[clifp]

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.

 

[Patrick]

real or nominal?

Nomireal.

 

[cute fuzzy bunny]

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.

 

[twaddle]

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

 

[clifp]

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.

 

[cute fuzzy bunny]

...and fat people get handicapped plates so they can park up front and not have to walk very far...

WTF?!?