160 Leroy Street
Jason10006 = Peter Schiff
Federal Reserve Bank of Cleveland:
"In the Bureau of Labor Statistics’ most recent release of the Consumer Price Index (CPI), the index declined in April at an annual rate of 4.3 percent. This follows a monthly decline of 2.2 percent in March. On a year-over-year basis, CPI inflation slowed from a recent peak of 2.0 percent in February to 1.1 percent in April. Taken at face value, this slowing of inflation suggests some further deceleration of inflationary pressure in the U.S. economy."
Jason is the Federal Reserve a government agency?
Which is why there is no way that the Fed is going to take the foot of the QE-Forever pedal any time soon: core inflation is running at about 1.1%; it should be around 2.5%. Anything below 1% is dangerously close to deflation, which is a trap that the Japanese have been trying to get out of for a decade now.
renter - the Fed is a bank. But if you don't believe their figures you can use the Billion Prices Project, which gathers prices from the Internet, to measure inflation:
Use the annual inflation chart - the daily chart will have compounding errors - and you will see that it almost perfectly mirrors the CPI, even though they don't measure quite the same things.
No Stevejhx I believe CPI is low and it will get lower as they reformulate how the CPI is calculated. It's that fact we don't have inflation I'm trying to wrap my arms around. Next time I pay for a movie, renew my lease, go out to dinner, pay my heating bill, fly to Florida etc. I just need to keep telling myself the prices are not getting higher because the CPI is still low.
"Jason is the Federal Reserve a government agency?"
Time to get the tinfoil hat out. The showed SEVERAL ways to measure it. Here is one non-governmental way to measure it. The billion prices from MIT track CPI pretty closely.
You didn't answer my question?
You can check online for the average prices of things using the billion prices project, which I showed you where it is.
There is a moderate amount of inflation - the Fed targets 2%, sometimes it's higher, sometimes it's lower. Some things move up, some move down.
You can see inflation-adjusted rents (oldish information) here:
And while prices go up, so do wages:
Maybe you have a bad job, but for most of us, while prices do go up, wages go up faster. If they didn't, we'd eventually all be broke.
renterjoey "You didn't answer my question?"
Because it was a completely stupid question and I knew where you were going. Inflation is low in almost all OECD countries by ALl measures. Even un-adjusted for quality (non-hedonic.)
Jason is clairvoyant.
Hey, it costs me more to buy a home. But we all know the gov't no longer counts home purchases.
The pace of home price increases stayed strong in April with prices up 12.1% year-over-year, CoreLogic says.
On October 27, 1981, Commissioner Janet Norwood announced that BLS would convert the CPI for All Urban Consumers (CPI-U) to a rental equivalence measure for homeowner costs, effective with data for January 1983.
That is because a home is an investment AND a product. This was most countries do. Just like you don't include the price of stocks or bonds in inflation calculations either. Duh.
They changed the CPI to owner-equivalent rent because the CPI represents the prices of expenses, not of assets. Stock prices aren't included in the CPI, either, nor is the price of gold; what is included in terms of purchased homes is what you would pay to live in your home if you rented it, instead of buying it. The actual purchase price of the home isn't what people pay; they pay the amortization of that cost as a function of price, interest rates, and taxes.
That said, never before in the recorded history of the world - almost - did rents get so out-of-whack with prices, so under normal circumstances the change shouldn't have mattered. However, though there would have been huge inflation during the boom, it would have been followed by huge deflation after the bust had the old measurement stayed the same. That didn't happen.
That is because a home is an investment AND a product.
Perhaps, but one could also look at a home quite differentlly. It could also be argued it represents a pre-paid rent expense. By purchasing a house you are pre-paying that liability in advance. Think of it like a pre-paid phone card, but for rent and for the rest of your life.
"Perhaps, but one could also look at a home quite differentlly. It could also be argued it represents a pre-paid rent expense."
Wow, that's genius. What if they came up with a way to tell how much is rent paid to yourself and how much is investment gains? Oh WAIT. They DID. Its called "owners' equivalent rent." Amazing, its already been used for the past 20 + years.
Someone get Jason a banana.
no matter how they formulate the CPI to keep it low there will be no exit strategy nor tapering off. Just a lot of talk but I can't see either one happening for a long time. Could you imagine what it will do to the economy if rates starting going back up. That 17 trillion in debt will be even more impossible to pay back and housing would be greatly effected. If on the other hand we keep printing 85 billion a month to keep interest rates low we will need to employ 1000's of mathematicians just to come up with new formulas and ideas to keep the CPI below 2.5%.
If the CPI only consisted only of the price of let's say bubble gum I think we can keep it below 2.5% for the next 5 years and spare ourselves from a any rate increase. Why confuse everyone with what's in or not included in the CPI.
Re OER: A survey number based on a hypothetical question is not data, "if you did rent out your apt and it was unfurnished, what do you think you would get?". Fact is homes are a depreciating asset, that they go up is because owners maintain and improve them. The sales price of homes is an actual measured value.
"But if you don't believe their figures you can use the Billion Prices Project, which gathers prices from the Internet, to measure inflation:"
Gathers prices from the internet!!!!!!So BPP is kind of like Amazon prices right? Now that's a silly way of determining inflation. BPP collects prices from ONLINE RETAILERS and not medical offices, restaurants, grocery stores, farm stands, or gas stations — therefore it is biased away from essentials — which should be the focus of any legitimate publicized number.
RenterJoey. I believe the dataponts are what they are. But when you apply add up the methodologies you get a non-sensical number. I'm sure they measure the cost of rice krispies just fine, the problem is at a different level entirely.
It's measuring online goods. Can't I buy gasoline online? nor can one buy health care services online as well.
>Can't I buy gasoline online? nor can one buy health care services online as well.
But you can buy bananas and like aboutready, if you don't like the bananas, you can return them for a full refund at Fresh Direct, no questions asked. How do you like them apples?
"Consumer Prices in U.S. Increased Less Than Forecast in May"
CORE is up by MORE than overall CPI. Meaning commodities continue to have LOWER inflation than overall inflation.
Don't know about you but fish represents the biggest percentage of my weekly food bill. I'm sure that's not what the CPI thinks...
Global fish prices have leapt to all-time highs as China’s growing appetite for high-end species – from tuna to oysters – runs up against lower catches
Changes in the Chinese diet have already boosted demand for grains and livestock feed, but the index suggests that the same phenomenon is under way in the seafood industry, where the total value of fish trade is expected to reach $130bn this year.
The cost of tuna – one of the most heavily traded fish species – has risen 12 per cent in the past year, to reach a record high, on strong demand from makers of sashimi and sushi, as well as from the canned tuna industry. This has coincided with smaller catches.
Shrimp, another heavily traded species, has risen in price by 22 per cent over the same period as supplies have been hit by disease in southeast Asia, as well as by a fall in wild harvests.
Salmon prices, meanwhile, have surged 27 per cent – but remain well below their record highs.
"June 19, 2013...The yield gap between 10-year Treasuries and Treasury Inflation Protected Securities, a gauge of traders’ expectations for consumer prices over the life of the debt that’s called the 10-year break-even rate, reached a 17-month low this month. It touched 2 percentage points on June 13, the lowest level since January 2012, compared with an average of 2.38 percentage points over the previous 12 months..."
With the fed the largest buyer these days of treasuries...
1 day ago
Member since: Oct 2007
ignore this person
Dumbass, if you are determined to consume an over harvested resource as your primary source of protein, of course your prices will increase. Substitution doesn't necessarily mean inferior. Lobster used to be cheap as hell. Food prices are more complex than your pea-sized brain.
Wow Aboutready, you seem very protective of these fish. Do you contribute money to wildlife or ecological causes, or do you just spout off? Get it? Spout off...
"With the fed the largest buyer these days of treasuries..."
Not TIPs. QE has nothing to do with the spread between treasuries and TIPs. If the market really feared inflation, they would be demanding a wider spread, not a narrower one. And the QE has been a steady and equal amount of USTs per month, and yet the spread has narrowed. Try again.
Wow sounds just like renter Joey.
Family Expenses sure have gone up...
Q1 2011 > Q1 2013
Baby sitting + 65%
Baby supplies + 23%
Groceries + 06%
Health Insur. +111%
Kids + 03%
Kids activ. +118%
Toys + 02%
Tuition + 70%
Utilities + 35%
Much of the newly-created money from QE has ended up as excess reserves. Basically, the banks park their excess reserves at the Fed and receive 0.25% interest. This money has not actually begun to circulate through the economy, so it has not produced inflation. This is despite the Fed creating a trillion dollars a year in new money.
For now, banks are comfortable collecting a low risk-free rate and having an extra cash cushion. The current political/regulatory environment has suppressed business activity, so there are actually few opportunities for banks to make high-quality loans of any significant size.
or now, banks are comfortable collecting a low risk-free rate and having an extra cash cushion
You are correct about the activity but not the motivation.
It's an asset liability issue. Q.E. bought treasury bonds from the fed which the banks kept as reserves, but from an accounting standpoint, they replaced one asset with another. The banks can't expand the balance sheet because assets since they trade under book or in other words liabilities exceed assets+owners equity. Q.E. doesn't solve that. For now the banks can't circulate an create new loans or put in effect a multiplier effect because they are balance sheet constrained.
But that doesn't take away from the effect that as restrained as inflation is, it's still a lot higher than the CPI would have you believe, Why because normal people don't eat chicken mgnuggets and frozen swanson dinnners. Quality Steak, Fresh fish, vegetables and fruits are all going up in price, so is health care, college tuition and the costs of cars which include features that we have no choice but to buy which add to the cost.
Over the past 12 months, the CPI has risen 1.8 percent and the "core" CPI has risen by just 1.6 percent.
In New York-Northern New Jersey-Long Island, NY-NJ-CT-PA, its up 1.8% YOY overall as of June.
>Health Insur. +111%
That's impossible, our President promised we will keep our plan, keep our doctor and save an average of $2500 per family, you right wing nutter.
Inflationphobia, Part I
Inflationphobia, Part II
Note that the WSJ, Forbes and CNBC HATE Obamacare. Your personal anecdotes don't trump actual data. If it it, then everyone's income has tripled over the past 10 years just like mine.
"Medical Costs Register First Decline Since 1970s"
"Health-Care Cost Inflation on Track to Slow in 2014: Report"
"Even With Obamacare, Health Inflation Falls To Historic Lows"
I just ate sushi. Therefore everyone ate sushi.
"How to Fearmonger About the Fed (In 2 Easy Steps)
Step 1: Don't use any evidence. Step 2: Mention the 1970s. "
"What Were They Thinking?
As the Fed sets in place the road map to withdrawing monetary stimulus, I wonder how it is that so many believed the Fed’s implementation of unconventional monetary policy would lead to surging high inflation. Examples include House Budget Committee Chair Paul Ryan, who stated in November 2008:
I think it's going to give us a big inflation problem down the road.
The source for the above statement, Reuters, also quotes Sarah Palin and Ron Paul.
Time to look back. Here are some graphs depicting inflation and inflation expectations as they evolved..."
Looks like the unions are starting to figure out how bad Obamacare is: http://www.forbes.com/sites/theapothecary/2013/07/15/labor-leaders-obamacare-will-shatter-their-health-benefits-cause-nightmare-scenarios/
is there a chart on the number of times that the CPI has been revised in order to prove we have little or no inflation. BTW looks like oil and gasoline prices are about hit all time highs.
didn't World Wide Wrestling Federation have a referee whose name was CPI.
He was known to look the other way while the wrestlers beat each other over the head with folding chairs that tossed onto the mat by their coaches.
imagination being you.
is yuck your favorite word, greensbergdalestein?
"Health Plan Cost for New Yorkers Set to Fall 50%"
Damn the actual facts, I am sure you'll say.
"Inflationphobia, Part III
By BRUCE BARTLETT
Bruce Bartlett held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Representatives Jack Kemp and Ron Paul. He is the author of the forthcoming book “The Benefit and the Burden: Tax Reform – Why We Need It and What It Will Take."
The Death of High Inflation [GLOBALLY]
"Federal Reserve 'Doves' Beat 'Hawks' in Economic Prognosticating
Slow Growth, Low Inflation Give Yellen, Dudley Upper Hand on Forecasts...
...The WSJ examined more than 700 predictions in speeches and testimony by 14 Fed policy makers—and scored the predictions on growth, jobs and inflation..."
Again and again, the inflation hawks are proven wrong.
Core PCE Inflation Falls To Second-Lowest Level Ever
Read more: http://www.businessinsider.com/core-pce-inflation-falls-to-second-lowest-level-ever-2013-7#ixzz2ae6qbieX
Core PCE is, uh.,. 42.4% HOUSING...
(next two segments are both 17%... education and food). So how meaningful is this if we're talking about impact to RE, really?
Mega super hyperinflation will happen....someday...somewhere on Earth....eventually.
"Producer Prices Miss Expectations, Come In Flat" [i.e. lower than expected]
"...Overall consumer prices increased 2 percent in the 12 months ended in July after a 1.8 percent year-over-year gain the prior month.
The core CPI rose 1.7 percent from July 2012, following a 1.6 percent advance in the prior 12-month period that was the smallest since June 2011...."
Apparently Jason is a big fan and a big believer of all the numbers being reported out by Washington DC. He's kind of like
their cheerleader for the reported CPI believing that it is the true indicator for inflation. I can seem him in a cheer-leading outfit chanting rah rah CPI.
For all those on the other-hand that believe what they actually spend or see when they go shopping and pay their bills well that's Jason's enemy.
Rah Rah CPI if CPI can't do it than PPI can.H ey Jason anyone tell you you look awfully cute in your CPI outfit.
Joe, simple math says you are wrong.
1) If inflation is REALLY higher, then GDP growth has in fact been NEGATIVE for several years now. Because real GDP growth equals nominal GDP growth minus inflation. Math. No escaping this.
Which makes no sense if state, local, and Federal tax receipts are going UP, and their deficits are shrinking at a faster than expected pace. And the US keeps adding jobs.
2) The bond market and lenders would be demanding that people, businesses, and government at all levels pay higher interest rates if "real" inflation was higher.
These things are mathematically impossible if "real" inflation is higher than the official figures.
1) "If inflation is REALLY higher, then GDP growth has in fact been NEGATIVE for several years now. Because real GDP growth equals nominal GDP growth minus inflation. Math. No escaping this".--Bingo now you are starting to catch on-Good for you. GDP has been revised like 20-30 times From 2002 to mid-summer 2008, the BEA revised initial GDP estimates a total of 25 times, 80% of which (20 revisions) were higher than their initial estimate. GDP estimates are based on ambiguous inflation measurement tools, they are created to under estimate inflation and over report growth. The most recent GDP projection used an annualized .71% inflation deflator to arrive at 1.7% growth. I believe most people except for you Jason don't believe that inflation is below 1%.
2) The bond market and lenders would be demanding that people, businesses, and government at all levels pay higher interest rates if "real" inflation was higher.
That's exactly what will start to happen for this economy is deteriorating that's why most companies can't afford to hire full time employees.Most are hiring part time workers and those are the jobs that are being added. Part time low wage jobs.
"I believe most people except for you Jason don't believe that inflation is below 1%."
I, no, inflation was 2% YOY in july per the CPI, dummy! Read the release.
"That's exactly what will start to happen for this economy is deteriorating that's why most companies can't afford to hire full time employees.Most are hiring part time workers and those are the jobs that are being added. Part time low wage jobs."
Ummmmm....uhhhh, no. A WEAK economy means LOWER interest rates. Basic, basic stuff.
The Fed's Favorite Measure Of Inflation Plunges Further
There's Still An Incredible Lack Of Inflation In The World
Read more: http://www.businessinsider.com/theres-still-an-incredible-lack-of-inflation-in-the-world-2013-9#ixzz2gNIga6bj
POLL: Americans Think Inflation Is Way Higher Than It Really Is
Read more: http://www.businessinsider.com/americans-think-inflation-is-way-higher-than-it-really-is-2013-10#ixzz2h4e5Wchw