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Re: Our Government says WHAT inflation rate????
Old 06-27-2006, 07:16 AM   #61
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Re: Our Government says WHAT inflation rate????

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Originally Posted by modhatter
Just went to the grocery store to pick up some Bryers ice cream. $5.50 for 1/2 gal. Last year it was 3.99 and sometimes on special for two for $5.00.
Superwalmart - Breyer's always $2.80 or so. If you have one near you check it out. I've found their food prices to be much cheaper than grocery stores. Many times Walmart's regular prices are about the same as the chain grocery store's "buy one get one free" prices.
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Re: Our Government says WHAT inflation rate????
Old 06-27-2006, 08:31 AM   #62
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Re: Our Government says WHAT inflation rate????

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I don't need to buy electronics every day, it's ice cream I need!!!
Good point directed at the "electronics prices are lower helping drive down inflation group". I thought that was debunked in one of these threads.....since you probably need to look at the top of the line products (i.e. top of the line tv now vs. the top of the line tv in the past)....otherwise, yeah, your betamax player has come down in price, which is driving down inflation
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Re: Our Government says WHAT inflation rate????
Old 06-27-2006, 10:53 AM   #63
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Re: Our Government says WHAT inflation rate????

Quote:
Originally Posted by Cut-Throat
Probably all of the economic experts that claim that CPI is a true measure of inflation are the buffoons, and all of the internet posters with anecdotal evidence really know what the inflation level is.

So what is the level of inflation on average in the U.S.?
I honestly dont know, and if you re-read my 'agenda', thats not really the point i'm trying to make. What I can say for sure is that the average inflation index thats calculated by the CPI is probably not accurate for the vast majority of people...simply because its an average of what the folks who put CPI together have decided to measure. It might be high or it might be low for any given person, and it might be off by a wide margin.

But wouldnt it be good for people to know what their personal inflation level is so they can make informed investing decisions, rather than just take someones word for it that they measured it for themselves and it seemed ok, so its probably ok for everyone, case closed?

For a young couple trying to buy their first house and paying for their own healthcare while trying to work two jobs and keep a couple of kids in daycare, with little time to bargain shop and a lot of commuting miles to drive...CPI is probably woefully low.

For a traditionally retired couple living in a very low cost area, with plenty of time to shop, and very little debt...CPI is probably a higher measure than what they're experiencing.

For an early retiree that lives in a high cost area, travels, eats out, and perhaps enjoys some of the finer things in life...I'm guessing that pinning 30 years of retirement living on an investment product that produces 1-3% "supposed real" without checking their own rate of inflation might produce some poor results in the long haul. Or some great ones.

Anyhow, your point as read by me is "cpi is pretty good because I measured my personal rate of inflation and it matched, if you dont think CPI is pretty good its because you're basing your opinion on anecdotal evidence and dont know what you're talking about".

I did measure my personal rate of inflation. By my non-anecdotal analysis of watching my own rate of spending as it changes from one year to the next and noting the "basket substitutions" and time I've put into lowering my cost of living increases, CPI falls short by quite a bit.

Using CPI to index cost of living for peoples pensions, social security and "inflation protected" bonds seems disingenuous to me, given that some peoples measured personal rate of inflation might show deflationary characteristics or they might run to 10-12%.

The idea is akin to saying that the average temperature in the US in January is 40 degrees, so everyone slap on some warm clothes and a parka. I'm betting that leaves some people a little chilly and some a little on the warm side...
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Re: Our Government says WHAT inflation rate????
Old 06-27-2006, 12:03 PM   #64
 
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Re: Our Government says WHAT inflation rate????

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For a young couple trying to buy their first house and paying for their own healthcare while trying to work two jobs and keep a couple of kids in daycare, with little time to bargain shop and a lot of commuting miles to drive...CPI is probably woefully low.
You are confusing budgets with Inflation. Yes the Young couple's budget has increased dramatically. Mostly because they are purchasing items in the 'inflation basket for the first time. Does not change their CPI however.

I think if you measured a 'young couple' in the 1950's vs. young couple today, you'd probably find that the increased costs tracked CPI pretty damn close. And yes you have to deal with averages. That's just a fact. No one said it was going to spot on year to year. Weather forecast deal with averages also. I don't automatically put on a Parka in January in Minnesota. We have had anomles of 55 degrees here in January. That doesn't affect the averages here that much.

Most retirement products that offer 'real return' + CPI are not aimed a young couple starting out. They are aimed at retirees and over the long haul, I believe that the numbers are pretty close. I used to side with you on this, that "the economists were 'all wrong', but I've changed my opinion.

Most anyone's personal budget can change but that is not what CPI is trying to predict. Have 3 more kids and watch your personal budget soar. That totally different than CPI.
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Re: Our Government says WHAT inflation rate????
Old 06-27-2006, 07:49 PM   #65
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Re: Our Government says WHAT inflation rate????

So a young couple that has to pony up the money for a 400k house that cost 250k two years ago are not experiencing any price inflation? Gimme a break.

I moved here three years ago, and if I sold this house and bought an identical property assuming an even transaction, my property tax increase alone would add 10% to my existing base budget.

So what you're saying is that CPI == inflation, but it has nothing to do with actual cost of living?

Or are you saying that this cool low inflation means the Bush administration is really knocking the cover off the ball with their economic programs? (sorry, couldnt resist)

And I have not said "the economists are all wrong". What I have a problem with is the widespread belief that cpi=inflation and I'm honestly not real fond of what it measures and how it measures it.

Let me say more succinctly what my point is, and see if you can tell me what you disagree with.

People should know what THEIR personal rate of inflation is, and act accordingly when deciding whether to buy CPI indexed securities because THEIR rate of inflation may be considerably higher than the CPI, and their expectations of earning a "real" rate of return vs their own experienced cost of living may be considerably disappointing.

In some areas, and given certain lifestyles and situations, a good percentage of people may be experiencing far higher than 2-4% "inflation". And sure, some may see a lower figure.

Its a GOOD idea to know what YOUR number is. Its a good idea to know that CPI <> "inflation" for everybody everywhere.

And NO, I dont think everybody "gets" that.
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Re: Our Government says WHAT inflation rate????
Old 06-27-2006, 07:56 PM   #66
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Re: Our Government says WHAT inflation rate????

Quote:
Originally Posted by Cute n Fuzzy Bunnay
So a young couple that has to pony up the money for a 400k house that cost 250k two years ago are not experiencing any price inflation?* Gimme a break.
The government uses the price to rent not own in their inflation computations. * *

This figure accounts for 33.8% of the inflation rate.

Will be interesting to see when the rate to rent goes up if they switch back. :P

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Re: Our Government says WHAT inflation rate????
Old 06-27-2006, 08:01 PM   #67
 
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Re: Our Government says WHAT inflation rate????

Quote:
Originally Posted by Cute n Fuzzy Bunnay
So a young couple that has to pony up the money for a 400k house that cost 250k two years ago are not experiencing any price inflation? Gimme a break.
Well sure they are, but then again this is not what CPI is about. CPI is about averages. Most of the folks here own their own homes and are just trying to figure out how much purchasing power their money is losing. (which is inflation).

Don't complicate it. It's not an exact measure. And if some folks move from Podunk Iowa to San Francisco their housing costs are going to the moon. That's not anything to do with inflation. It's their personal budget.

What I don't understand is why you are so emotional about it. All I said is that I believe the CPI figure. I never implied that all people of all ages could base their personal budgets on it. Give me a break!
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Re: Our Government says WHAT inflation rate????
Old 06-27-2006, 08:04 PM   #68
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Re: Our Government says WHAT inflation rate????

I'm fully aware of that.

How does that change the point I've raised?

In many areas the price of homes has skyrocketed while the price of rents has not gone up. While there are a lot of reasons why this occurs, not one of them produces any helpful effect on a couple that wants to buy a house. The high prices of homes simply means many of them cant afford to buy a home and must continue renting, or get into an exotic mortgage that may turn out to be financially suicidal. This has a fundamental cost of living effect on every single person in the US, as we all bought or will buy our first home eventually.

As I've pointed out, even an existing homeowner that moves and exchanges properties, resulting in a new assessment, can see a huge property tax increase. Thats a cost of living change.

Can you defend a measurement that doesnt take this into consideration?

Does the fact that CPI doesnt include it mean that it isnt there?

Is it helpful that some folks think they can buy TIPS and keep up with inflation and make a couple of percentage points on top of that?

Sure as **** hasnt worked out too well in California over the last few years...
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Re: Our Government says WHAT inflation rate????
Old 06-27-2006, 08:07 PM   #69
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Re: Our Government says WHAT inflation rate????

Quote:
Originally Posted by Cute n Fuzzy Bunnay
I'm fully aware of that.

How does that change the point I've raised?
In context with the title of the thread:* "Our Government says WHAT inflation rate?".

It does not matter what the cost to own does when they use the price to rent to determine the inflation rate.*
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Re: Our Government says WHAT inflation rate????
Old 06-27-2006, 08:09 PM   #70
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Re: Our Government says WHAT inflation rate????

Quote:
Originally Posted by Cut-Throat
Well sure they are, but then again this is not what CPI is about. CPI is about averages. Most of the folks here own their own homes and are just trying to figure out how much purchasing power their money is losing. (which is inflation).

Don't complicate it. It's not an exact measure. And if some folks move from Podunk Iowa to San Francisco their housing costs are going to the moon. That's not anything to do with inflation. It's their personal budget.

What I don't understand is why you are so emotional about it. All I said is that I believe the CPI figure. I never implied that all people of all ages could base their personal budgets on it. Give me a break!
:

If theres any emotion involved, its because I keep asking you the same question and you keep arguing points that i'm not arguing.

One last time. What do you disagree with:

1) everyone should know their personal cost of living inflation rate
2) everyone should understand that CPI does not equal cost of living changes for their personal budget
3) everyone should understand that "inflation protected" securities will not necessarily preserve their moneys purchasing power as a function of #1
4) the mainstream media and many people think that CPI is supposed to closely measure inflation for most people in most places
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Re: Our Government says WHAT inflation rate????
Old 06-27-2006, 08:11 PM   #71
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Re: Our Government says WHAT inflation rate????

The reason for this is to underpay social security COLA.

That is the bottom line. Believe it or not.
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Re: Our Government says WHAT inflation rate????
Old 06-27-2006, 08:14 PM   #72
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Re: Our Government says WHAT inflation rate????

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The reason for this is to underpay social security COLA ... Believe it or not.
most definitely, NOT.
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Re: Our Government says WHAT inflation rate????
Old 06-27-2006, 08:19 PM   #73
 
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Re: Our Government says WHAT inflation rate????

Quote:
Originally Posted by Cute n Fuzzy Bunnay
:

If theres any emotion involved, its because I keep asking you the same question and you keep arguing points that i'm not arguing.

One last time. What do you disagree with:

1) everyone should know their personal cost of living inflation rate
2) everyone should understand that CPI does not equal cost of living changes for their personal budget
3) everyone should understand that "inflation protected" securities will not necessarily preserve their moneys purchasing power as a function of #1
4) the mainstream media and many people think that CPI is supposed to closely measure inflation for most people in most places
Likewise - You keep arguing points that I'm not arguing.

OK totally different discussion of this thread, but I'll patronize you.

1.) Agree
2.) Agree
3.) disagree
4.) disagree

Now that we've got that out of the way. The title of the thread was "Our Government says WHAT inflation rate??

They use CPI - I believe the number, as do countless most economists. It's an average and again, It was never to supposed to work for all people's budgets. But it's a better number than you have ever given me. I believe that TIPS will preserve your purchasing power as long as you don't change your standard of living (Move from Mississippi to San Francisco or the reverse)



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Re: Our Government says WHAT inflation rate????
Old 06-27-2006, 08:27 PM   #74
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Re: Our Government says WHAT inflation rate????

Ok then, have a nice day.
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Re: Our Government says WHAT inflation rate????
Old 06-27-2006, 08:37 PM   #75
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Re: Our Government says WHAT inflation rate????

Quote:
Originally Posted by d
most definitely, NOT.
Interesting how we hear about "home ownership is at record highs":

(1) More Americans then ever, duh.
(2) Then why use the price to rent to calculation inflation, hmm.

2003 numbers:

Quote:
An ongoing study by Advisor editor Mary Johnson found that a person who retired in 1984 with an average monthly benefit of $460.60 would have received $7,802 more over the years by using the CPI-E rather than the CPI-W to calculate the COLA.* The difference compounds over time. Today that person receives about $824.60 per month.* If that person had received a COLA based on the CPI-E, their monthly benefit would be $63 more in 2004, or about $887.60.
Senior CPI 14 Percent Higher Than COLA

http://www.tscl.org/NewContent/102113.asp
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Re: Our Government says WHAT inflation rate????
Old 06-27-2006, 08:42 PM   #76
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Re: Our Government says WHAT inflation rate????

Quote:
Originally Posted by Cut-Throat
They use CPI - I believe the number, as do countless most economists.
Most economists know that the CPI is a massaged joke to prop up the USD.* *
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Re: Our Government says WHAT inflation rate????
Old 06-27-2006, 08:57 PM   #77
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Re: Our Government says WHAT inflation rate????

To be fair, a lot of economists think the CPI overstates "inflation", and a lot think it "understates".

I think its a good idea for people to be informed, and to realize that inflation affects each of us pretty differently. Unfortunately its a long slow effect and making the wrong decisions could lead to some serious financial problems in the long term.

Read this for a good idea of why you should gain as much comprehension on the topic as you can.
http://www.mises.org/freemarket_detail.asp?control=368

And this is a good leaping off point to get some broader scope and different opinions.

http://en.wikipedia.org/wiki/Consumer_price_index

Read some of the articles on how different aspects of the CPI and inflation are calculated, and see if they apply to you.

If you really have too much time on your hands, read this and follow some of the political wrangling that went on around it.
http://en.wikipedia.org/wiki/Boskin_Commission

In short, the Boskin commission argued for a reduction in the CPI's results by a little over 1%, and amidst stern economic opposition the Clinton era congress approved the reduction.

Guess what...the same folks that brought you the Boskin Commission think that the "new" CPI overstates inflation by another 1%...

This is your money folks. Stick your head in the sand or educate yourself.
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Re: Our Government says WHAT inflation rate????
Old 06-27-2006, 09:03 PM   #78
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Re: Our Government says WHAT inflation rate????

Quote:
Most economists know that ...
we all know that gov't is:
1) much too busy printing money ... and since it does so with great abandon, it can easily pay whatever COLA it decides upon;
2) purposefully devaluing the dollar to prop-up corporate profits to fund the campaign contributions to incumbent politicans.
3) etc. etc. etc.
get a grip
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Re: Our Government says WHAT inflation rate????
Old 06-27-2006, 09:47 PM   #79
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Re: Our Government says WHAT inflation rate????

Quote:
Originally Posted by d
we all know that gov't is:
1) much too busy printing money ... and since it does so with great abandon, it can easily pay whatever COLA it decides upon;
2) purposefully devaluing the dollar to prop-up corporate profits to fund the campaign contributions to incumbent politicans.
3) etc. etc. etc.
get a grip
I do got a gripe.* I know it is a sham and invest accordingly.* *
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Re: Our Government says WHAT inflation rate????
Old 06-27-2006, 09:48 PM   #80
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Re: Our Government says WHAT inflation rate????

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Originally Posted by Cute n Fuzzy Bunnay
Stick your head in the sand or educate yourself.
Then determine their political point of view.
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