mathjak107 said:you cant even say electronics are cheaper today either...as an example my sony xbr set was 750.00 about 15 years ago..if you know tv's the xbr line represents the latest and greatest technology of that day..while yes today you can buy an equivelent performing to my 15 year old set for 250 bucks the equivelent xbr representing todays latest and greatest technology is 2200.00........you cant compare just equal performance without comparing it to where it is in the "quality performance scale of that time period...........my first cd player was 1,000 dollars but it was state of the art new technology best of breed in those days...while a cd player today can cost 50 bucks the best of breed is 2500-10,000 bucks
justin said:Well, assuming you were a kid 50 years ago, that would mean a 4.7% inflation rate.
Did the pizza get bigger, better, tastier? Does it have more expensive ingredients now?
I'm thinking back to what a combination dinner at your generic mexican restaurant cost when I was a kid (10-15 years ago). Around $5-6 bucks. Now it is $6-6.50 at the same types of places. Does this suggest astronomically low inflation? I have successfully refuted your pizza example by introducing this new proof.
I would love to be a little kid now. With walmart and the dollar store selling all those awesome toys (cheap plastic crap to us adults), it would be amazing! The stuff they sell now is twice as nice, there's twice as much of it all at half the cost.
justin said:thinking back to what a combination dinner at your generic mexican restaurant cost when I was a kid (10-15 years ago). Around $5-6 bucks. Now it is $6-6.50 at the same types of places. Does this suggest astronomically low inflation? I have successfully refuted your pizza example by introducing this new proof.
I would love to be a little kid now. With walmart and the dollar store selling all those awesome toys (cheap plastic crap to us adults), it would be amazing! The stuff they sell now is twice as nice, there's twice as much of it all at half the cost.
sgeeeee said:The main reason is because it's not as simple as many people think it is.
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Now multiply those problems by everyone in America.
This is not true. It is designed to measure price changes. "Cost of living" obviously includes this, but also includes many other things. Herein, I'd guess, lies much of the expressed dissatisfaction with CPI.Cute Fuzzy Bunny said:...lets remember that this stat is supposed to measure changes in the costs of living...
I agree with your conclusions, but merely point-out that there is a clear difference between the limitations of its construction and the misuse of the result.Cute Fuzzy Bunny said:- It is not an accurate measure of broadbased inflation for everyone
- It is not an accurate measure of the changes to the cost of living for everyone
- CPI indexed investments do not necessarily produce "real returns" for all investors.
Cute Fuzzy Bunny said:What you had was a 30 year "CPI proof" investment plan. In some areas, lifestyles and spending patterns, that might be better than an inflation proof plan. I'm betting that for most ER's, its not.
I agree completely. While I think the compilation and statement of CPI represents excellent work and a very honest attempt to capture inflation with a single metric, you would be a fool to believe that it captures your personal experience. Inflation indexing that tracks the CPI is better than not getting increases when inflation rises. But if CPI actually tracks your personal requirements for increasing income it would be simply a wild coincidence.Cute Fuzzy Bunny said:. . .Tell you what though, I'd be happy to agree on two things. One is that CPI <> Inflation, and the other is that buying a CPI indexed asset does not produce a "real" return. Those two misconceptions could be pretty painful for an investor to misunderstand. . . .
Cute Fuzzy Bunny said:My point is simply that tips and ibonds do not produce a "real" return; at least not for everyone. I think a lot of people dont understand that. In fact, Vanguards and the Treasury both describe their CPI related products using the terms "real return".
My opinion: the CPI is a reasonable measure of what it purports to be. It is not without limitations, and in all liklihood cannot be. When one chooses to use it, the user should be aware of what it is and what it is not.Cute Fuzzy Bunny said:perhaps a statement of your opinion on the topic subject would be helpful rather than your feelings about others opinions. I still dont know what yours is. Sounds like you think CPI is a good measure and that it shouldnt be put to the tasks its being put to?
wab said:This is just semantics. .
Invest in stuff that beats my actual personal rate of inflation.If you determine that your personal rate of inflation is higher than the CPI, my question for you is: what are you going to do about it?