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Old 07-02-2012, 01:44 PM   #61
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The government gives us their official inflation numbers. They have every reason to minimize this number; no reason to maximize it. So I think we can assume that if anything, this number is low.
+1. As I try to point out, people slide down Bernicke's spending schedule without realizing or admitting it. No matter if it is good or bad, people generally tend to spend less as they age.
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Old 07-02-2012, 01:53 PM   #62
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I think it is very useful for people to actually look at how the government calculates inflation.

They calculate it for different metro areas, and different populations of people (CPI-U vs CPI-W makes a big difference). Ultimately, all of these different calculations boil down to figuring out what people are buying, and in what amounts. When you get into the nuts and bolts, it is the weightings of the various categories that ends up determining the inflation rate.

There really isn't a general, all purpose "inflation" number. It all depends on what you are buying.

If you buy lots of health care, college tuition, and ribeye steaks, you are experiencing huge inflation.

If you buy lots of electronics, walk to work, and eat off of dollar menus, you are not seeing any inflation.

The headline numbers are the government's best effort at determining what the rate is as a group.

Quote:
Originally Posted by haha View Post
The government gives us their official inflation numbers. They have every reason to minimize this number; no reason to maximize it. So I think we can assume that if anything, this number is low.

So yes, there is inflation, relentless inflation. Recently a very bad employment situation has slowed inflation down. Some are able to not notice it because they 1)already own most of their need life goods 2)are getting older and less active or 3) are willing to rename what an economist would call downward modifications in standard of living to "budgetary flexibility" or whatever phrase seems ok.

Still, inflation is what it actually is. We can't just redefine terms and continue to use the same terms under this new definition.

Maybe the process being described might better be called Stealthy Downward Adjustments in Standard Of Living.

Ha
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Old 07-02-2012, 02:29 PM   #63
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Well, I pulled out my receipts (via Quicken) and here are my grocery expenditures starting in 2007

2007 - $6,811
2008 - $6,722
2009 - $5,467
2010 - $5,939
2011 - $6,880
2012 - $3,112 ( 1/2 year)

We eat pretty much the same, in the same community since 1999 with nothing much changed in our way of life. Interesting though that there was a dip in 2009 and less so in 2010. I wonder if we were doing some subconscious substitutions (particularly in 2009) since the end of the world was at hand.
I actually think food prices dropped in 2010 and rebounded in 2011.

I looked at my Quicken records, and I see similar results!

I combined my grocery plus dining out expenses since some years groceries were down but eating out was up and vice versa. From 2000-2005 these expenses increased quite a bit. But from 2005 on they have been more or less steady.

Here are the comparisons to 2005 where 2005 is the "baseline"
2005 - 100%
2006 - 105% of 2005
2007 - 105% of 2005
2008 - 109% of 2005
2009 - 93% of 2005
2010 - 80% of 2005
2011 - 102% of 2005
2012 YTD - 40% of 2005

So even though ups and downs over the 7 years, last year was pretty close to 2005. We also dropped quite a bit in 2009 and 2010. I think we simply didn't spend as much time in more expensive parts of the country those years.
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Old 07-02-2012, 04:26 PM   #64
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Just for the fun of it (Isn't Quicken wonderful) i got the grocery expense information for the period 2000 -2006:

2000 - $8,563
2001 - $7,474
2002 - $6,824
2003 - $5,470
2004 - $5,451
2005 - $6,681
2006 - $6,511

It's interesting to me to see the drop in expenses from 2000. We had just moved to SW Oregon from a large metro area and I think we were carrying on with the prepared meal mind set. By 2001 my wife had retired and I can see the grocery cost dropping.
I retired December 2002 and it was interesting to see the drop for 2003 and 2004 maybe we were adjusting subconsciously to the new no paycheck life? In any event it looks like we were back to "normal" by 2005 and haven't been changed much since then.
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Old 07-03-2012, 10:58 AM   #65
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If you buy lots of electronics, walk to work, and eat off of dollar menus, you are not seeing any inflation.
Especially if that dollar menu doesn't send you into the healthcare system!
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