Re: Cpi
 

http://www.youtube.com/watch?v=NJbIU...layer_embedded

TM

Re: Cpi
 

I'm not sure it's a bad idea. But it is a tax increase. Maybe even a very big one.

It will be interesting to see if the right wing news machine reports it that way.

Re: Cpi
 

Video is gone.

Re: Cpi
 

It was the Romney Gangham Style parody.

Searching for Sebby's Inflation
 

Let's look at some more graphs.

So, what essentials could be getting more expensive faster than overall inflation, such that they could silently squeezing Joe Sixpack?

Well, given that no one's buying houses, maybe rent? Let's see.

Here's rent since 2000:
http://research.stlouisfed.org/fredgraph.png?g=blc

Okay, nope. Rents were surprisingly right on trend through the recession (shaded area), then went strangely flat for awhile and back to a similar rate of increase without catching back up to the pre-crisis trend.

I guess the decline in the rate of household formation (i.e., more people living in mom's basement) outstripped in increase in people renting instead of owning.

What else?


Car loan rates?
http://research.stlouisfed.org/fredgraph.png?g=bld

Nope.

New Vehicles?
http://research.stlouisfed.org/fredgraph.png?g=ble

Well, okay, so that's some significant recent rates of price increase, but that's following big declines that leave the overall level barely higher than in 2000.

A longer time frame suggests that vehicle prices have been essentially flat since a peak in the late 1990s:
http://research.stlouisfed.org/fredgraph.png?g=blg

ETA: Btw, those numbers for cars should probably be among the less credible. The real challenge in putting together the CPI (or any measure of price level) is adjusting for improvements in quality. For an easy to understand example, a moderately high end laptop today costs about what a moderately high end laptop cost ten years ago, but is a vastly improved product.

Cars have to present even more difficult comparison. Even for models that were around in the past, is a 1990 Impala the same thing as a 2012 Impala? The addition of ABS, airbag, emission systems, traction control or whatever are surely quality improvements. How much of the difference in price do they explain? Someone at the BLS may have to decide.

more searching
 

Because apparently you can only put so many images in a post:

I guess I was wrong earlier, the graph I posted yesterday was just food, so maybe it didn't cover the orange juice, but here's food and beverages (I don't see just beverages):
http://research.stlouisfed.org/fredgraph.png?g=blh

Looks a lot like the food graph (maybe food dominates).

Maybe it's the Big Gulp and the Happy Meal? Food away from home:
http://research.stlouisfed.org/fredgraph.png?g=bli

There's a little bulge there in 2009, but overall a pretty steady trend.

Let's look at monthly changes just in case:
http://research.stlouisfed.org/fredgraph.png?g=blj

Yup. Pretty consistent except for the spike in 2009, followed by a trough and a return to trend.

Re: more searching
 

Juxtapose wages against those graphs and tease out the inflationary impact on consumers.

David Einhorn, Tin Foil Hatted Lunatic, on CPI Accuracy
 

"Now, government statistics are about the last place one should look to find inflation, as they are designed to not show much. Over the last 35 years the government has changed the way it calculates inflation several times. For example, under the current method, when the price of chocolate bars goes up, the government assumes people substitute peanut bars. So chocolate gets a lower weighting in the index when its price rises. Even though some of the changes may be justifiable, the overall effect has been a dramatic reduction in calculated inflation.

According to www.shadowstats.com, using the pre-1980 method CPI would be over 9%, today compared to about 2% in the official statistics. While the truth probably lies somewhere in the middle, this doesn’t even take into account inflation we ignore by using a basket of goods that does not match the real world cost of living. For example, we all now know that healthcare, which is certainly a consumer good, is about one-sixth of our economy and its cost has been growing at a rapid pace. So what is the weighting of healthcare in the CPI? About 6%. The government doesn’t count the part which the consumer doesn’t pay out of pocket. So, if your employer has to pay more for your health insurance, it doesn’t count, even if it means you have to accept lower wages. Similarly, Medicare cost increases don’t count, even though everyone has to pay higher taxes to fund them. Income and payroll taxes, which are part of the cost of living, are not counted in the CPI either.

On the other hand, one-fourth of the index is comprised of something called owners’equivalent-rent. This isn’t something that anyone actually pays for. If you own your house, the government assumes you are foregoing rental income. The amount that you could receive from a hypothetical renter — the government implicitly assumes you rent it to yourself — is counted in the basket. So, rising taxes, which you do pay, don’t count; the fast rising cost of healthcare, which someone else pays on your behalf, doesn’t count; but hypothetical rents which you don’t pay, and conveniently don’t rise very quickly, have a huge weighting. The simple fact is that if your goal is to never see inflation, you won’t see it until it is rampant."

http://www.scribd.com/doc/32059635/D...ce-Speech-2010

ETA: I assume you'll take the low hanging fruit, Adder, and go off on a rant about how Shadow Stats is filled with mad ramblings. While you're shooting that messenger, find some basis to challenge the billion or so proofs establishing Einhorn knows more than you.

Re: more searching
 

Why? You said pernicious inflation in essentials, which was not reflected in the headline CPI, was the part of the problem. It's just not.

As for wages, again, find me wage data that includes the value of health benefits and we can get somewhere.

Re: David Einhorn, Tin Foil Hatted Lunatic, on CPI Accuracy
 

Congrats, you've got one rich guy who, yes, needs a tin foil hat.

The fact the he cites Shadow Stats, which is filled with mad ramblings, should be sufficient proof of that, if the fact that he's spouting nonsense about inflation isn't enough for you.

By the way, his point about health care cuts directly against you.

ETA: It gave me a good laugh, though, that you found a hedge fund guy to take your side. Everyone know how smart they are.

EATA: Also notice how we've been looking at individual components, not the headline CPI?

Last edit: Trying to put together a comprehensive measure of what's happening to the prices consumers pay for with their wages is a difficult task. It includes all kinds of choices and judgments. Your hedge fund buddy quibbles with some of them. I'm sure are many more that could be quibbled with. But let's consider why the BLS made the choices he mentions.

Health care: Again, they are looking at the basket of good people buy their wages. People do not buy the employer portion of their health care premiums out of their wages. That choice makes perfect sense. But to make the comparison you're asking us to make, it would be objectively wrong to include employer-paid health insurance premium. It's either in on both sides of the equations or out on both sides, not in on the side that helps make your case.

Taxes: Yes, the CPI does not include taxes. Or more accurately, it doesn't attempt to capture any particular individual's tax exposure. It would be impossible to do so in any meaningful way, as people face vastly different taxes. That said, overall market prices do reflect the overall tax levels, as it's part of produces costs. But more importantly TAX RATE CHANGES AREN'T INFLATION. They don't share causes or symptom with inflation. They are just irrelevant to what we are trying to measure. Finally, the historically low level of taxation that we've been experiencing over the last few years also cuts directly against your position. Joe Sixpack has more money in his pocket because of changes in taxes since 2008, not less.

Housing: Housing is the single biggest cost facing consumers. Yeah, it's going to have a big weighting in the basket. It would be absolutely moronic not to. Surely we can agree on that. So, with that agreement, what's the measure? Do we just look at people's mortgage payments? That would be highly inaccurate, given the vast differences the result from the timing of purchases. It also would ignore a significant source of inflation when housing costs are increasing. I don't know all the details about why the BLS made the decision it made, or what all of the alternatives would be, but looking at what rents would be doesn't sound outrageous.

You made a valiant effort, but no, there is no there there.

Re: The case for a Sebby-style health care system
 

Interesting. How does one's housing cost decrease? "Hi, BofA. Yes, I'd like to lower my mortgage payment. My wages are flat and it's tough. No? Pretty please? Oh, you're just mean."

What you're seeing there, I suspect, is a flawed measurement. Those in houses they likely overpaid for (millions of people) are getting hammered as their wages stay fairly flat while the house price stays the same.* The only reason the cost of it goes down in the CPI is because speculators are buying fuckloads of foreclosed properties, which skew the buy in price lower.

Under this logic we could then simply allow health care costs to rise unchecked to fix our growth problem. Brilliant.

Indeed. This has always baffled me about Obamacare. Why attempt to cut costs? If health care inflation provides consumption and growth we need, isn't the better answer legalizing all drugs, selling cigarettes in schools, and mandating 20% trans fat content in all foods?

Did I argue for austerity? Did I argue against QE? No. You've suggested I did, why I'm not sure... My only point was, QE is but a patch, a band-aid, and on its own, it cannot create the demand or growth needed. That point still stands.
______
* Don't argue subprimers who benefit from low rates against this point. They're a sliver of the market. And don't argue, Everybody's been able to refi. Nobody underwater has refi'd anything. These are millions of would be consumers who aren't buying shit because their wages are not moving sufficiently upward.

Re: David Einhorn, Tin Foil Hatted Lunatic, on CPI Accuracy
 

Translation: I got nothing.

Re: Cpi
 

"Obama 2012! Netting Out More Than I Would With the Mormom I Can Believe In!"

And if you don't think I'd vote Democrat in heartbeat if it benefited me, you're wrong. They could run a drooling imbecile whose stump speech was nothing more than a series of high-pitched screams, coughs, and occasional vomiting fits. If the troll netted me more than the other guy, I'd vote for him twice (we get to do that in PA, if you know the right people).

Re: The case for a Sebby-style health care system
 

Stop being obtuse. Lots of people rent. Their rent can go down, or they can move to make it go down.

Other people refinance at lower rates.

Other people move into cheaper housing.

Other people move into their parent's basement.

Stop playing dumb.

ETA: Oh, and now we've seen the bacon and chicken wing don't cost significantly more at the grocery store.

Surely you saw where I said "for other reasons?"

Tight money is not austerity. You're making all the arguments made by the hard money zealots.

Knowing you, I should know that that does not imply that you agree with those people's policy prescriptions, but until you say otherwise, I have no choice but to assume so.

Ah, sweet, sweet irony.

You know what it's called when everyone's wages are "moving sufficiently upward?" Inflation.

Re: David Einhorn, Tin Foil Hatted Lunatic, on CPI Accuracy
 

Forgive me for intruding on the Adder-Sebby board, but the above comment is eerily similar to some of the crap in an expert report I'm dealing with right now, who seems not to understand that obvious double-counting is bad and tends to undermine credibility.

Carry on.