cpi shows inflation over 9% using 1980 methodology

I think a great deal of entrepeneurial talent in this country could be unleased if the government moved more toward a libertarian model. Government's role should be focused more on transparency, fair compeetition and enforcemetn of law. Lots of wasted effort spent by people/corporations seeking to minimize taxes through tax credits and deductions. Banks seeking to minimize regulatory capital. It's confuising and wastes economic resources. The only parties that benefit here are beurocrotats, politicians, lawyers and accountants. We have so much talent in this country, it should be better utilized.

I think mandatory results may be the first step.

I think a great deal of entrepreneurial talent would be unleashed if people knew that they wouldn't be bankrupt with unforeseen HC bills, or need to save for their children's college education.

That's exactly what we need, guaranteed risk free entrepreneurism.

"until i actually join 10023 on her commune and take up gardening for sustenance" ... I have some extra heirloom tomato seedlings if you want them for your survivalist commune, aboutready and nyc10023.

And spinnaker1, I'll take one order of guaranteed risk free entrepreneurshipmanism.

Too many safety nets/hand outs are bad and I'm not necessarily speaking of those enjoyed by individuals. Look at all the corporate subsidies, tax breaks loan guarantees and credit guarantees. Look at the sugar industry, Ethanol producers, banking.. the list goes on. These policies do not foster global competitiveness, raise prices and create hidden costs.

Spinn,
Talk about negative comments...and from you?
I read the exchange...are you advocating an head in the sand approach to the current economic climate?
Careful analysis and opinioned exchanges is how we chart our course toward the future. Happy optimism is how you deal with you family. Cautious analytical assessment is how the deal with business and investment. Heck it how you deal with life if you don't want to wake up one day and have to 'start your life over'. I'm a belt and suspenders guy...I'll admit it. For sure my pants always stay up cause that's the way I like it. A down beat forecast is a good reason to consider your options. I like good weather as much as the next person but, I don't count on it. Got something to add? I've read your posts...go back to value added comments as opposed to personality whacking. By the way, I looked at the chart that AR posted and it is ominous. I am greatly concerned about the employment conditions of the country. I will remind you that there once was a Rome and it ruled the known world, better than any that had come before it. Then in a blink on an eye it was no more. Save the shiny optimism for the Moms at pre-school pickup.
On a lighter note, how's the new home coming along?

Look at any manic depressive and I'm sure they will tell you they are being analytical and especially realistic...

There are a couple of ways to look at the employment picture.
1) Our economy was based on too much unsustainable domestic consumption
2) Companies use a recession as an excuse to cut jobs that are no longer needed due to changing technologies
3) Announced tax increases are putting us in a defensive mode further cutting GDP

The spending packages previously annnounced were a waste. They did not go to important infrastrucure
projects like the fixing of the national energy grid. We would have had the current bounce anyway as
corporate america cut back too much and we are seeing inventory rebuilding.

G'day falco!

Head in the sand? Never! It could be my stiff-upper-lip upbringing but I find the more you dwell on the shit the more you become covered in it. I know the bad, it is in our face every day. If you don't watch out though it can become a self fulfilling prophecy. I'd rather go down railing against the evil forces of darkness than saying I told you so.

The shack by the way is wonderful. I spend my days outside writing on the terrace, feeding the finches, blissfully ignoring the bombers in the sky.

...and drinking tea

"drinking" "tea"?

You're right, it's past noon. Where has the morning gone?

"James, out with the gin and cashews. Immediately."

If you bring up voting, why not have a Civic responsibility day. On the same day you vote you also file your taxes and have to write out a check for all your taxes (no withholding) including the employers payroll taxes.

And combine school board and other municipal elections on the same day as Election Day so turnout is a bit higher than 5-10%.

BBQ This weekend?
I'm free.....

Sure, my place?

http://www.minyanville.com/businessmarkets/articles/coffee-prices-starbucks-green-mountain-coffee/6/16/2010/id/28791

Of course the government statisticians will insist that coffee drinkers switch to tea..

I went Dunkin Donuts.... saved 60% on my coffee tab... cheap, it's the NEW NEW rich...

The government may soon have to worry...

Google is using its vast database of web shopping data to construct the ‘Google Price Index’ – a daily measure of inflation that could one day provide an alternative to official statistics.

At the National Association of Business Economists conference in Denver, Colorado, Mr Varian said that the GPI was a work in progress and Google had not yet decided whether to publish it.

While the Federal Reserve is unlikely to panic just yet, Mr Varian said that the GPI shows a “very clear deflationary trend” for web-traded goods in the US since Christmas. Although the data are not seasonally adjusted, Mr Varian said that prices rose during the same period a year ago. The ‘core’ CPI in the US, which excludes food and energy, rose 0.9 per cent on a year ago in August.

"the GPI shows a “very clear deflationary trend” for web-traded goods in the US since Christmas"

...which exactly the opposite of what you have been saying for 120 posts.

Who knows how complete the data is... YET

By PAUL ZIOBRO
McDonald's Corp. plans to raise menu prices to blunt higher costs, including what would be its first such increase in the U.S. in more than a year—a time when the burger chain's sales have thrived amid lower prices.

The company expects to increase prices in the U.S. and Europe amid projections that commodity costs will rise between 2% and 3% in 2011, Chief Financial Officer Peter Bensen said Thursday during a conference call .

http://online.wsj.com/article/SB10001424052702304023804575565890871336672.html

Timing and executing price increases can be tricky as McDonald's and other companies are caught between paying more for key materials such as meat and wheat, and keeping prices low to attract price-sensitive customers in a still-weak economy. McDonald's says it has the pricing power to pass on some of those costs.

Even the stupid i-phone cartoon characters knows the Fed is wrong and we have inflation..

http://www.youtube.com/watch?v=PTUY16CkS-k&feature=player_embedded

McDonald's prices have NOT been going up 9% a year since the 90s, utterly refuting your original post. Adjusted for the fact that "small" sizes USED to be "large" sizes (GASP!!!! HEDONICS!!!!), McDonald's prices have gone up in-line with overall inflation as measured by the CPI. For decades.

....Meanwhile, your "stupid iphone" costs the same as it did 4 years ago, but does 10 as much. Hedonics at work.

How many i-phones do you buy a year vs subway metro cards, haircuts,containers of orange juice, ground coffee, beef, fish. If you have a child in college ,how many i-phones equals a single semester? If you pay for health care how many i-phones equals that? When folks point out the examples of cell phones, computers and televisions and say costs are falling, it really makes one wonder if they've looked at the forest or the trees.

I buy a cell phone and a laptop every other year, and TVs about the same. And the quality of each new one improves as the prices drop or stay flat. And I get WAAAAY more cell phone minutes per dollar than ten years ago, and many more high def cable channels than even two ago. Hedonics.

You replace your television every 24 months?
That's worse than inflation. I believe economists refer to that as pissing away money.

I go to Rite-Aid, stock up when things are half-priced. Just got two 24-ounce jars of Planter's Peanuts for $5.49. I think that's quite the deal.

Unfortunately for RS (yet again), the very policies he espouses are the ones that are causing inflation: direct aid to colleges reduced, health care providers exempt from antitrust laws, orange juice protected by import quotas, fish....

Fish?

http://www.cnbc.com/id/40135092

A new pricing survey of products sold at the world’s largest retailer [WMT 54.13 -0.21 (-0.39%) ] showed a 0.6 percent price increase in just the last two months, according to MKM Partners. At that rate, prices would be close to four percent higher a year from now, double the Fed’s mandate.

Prices of cotton, silver wheat, soybeans, corn are all up big this year. Cotton futures are up the most, climbing 90 percent so far in 2010. The price of silver is up 63 percent.

I like new things. And electronics and cars and other such things whith quality permdollar improvements are clearly part of typical consumption. Internet acres is a prime example. The price per bit has plunged.

o.k. but regardless Jason, you are an outlier.

"November 4 – Wall Street Journal (Julie Jargon and Ilan Brat): “An inflationary tide is beginning to ripple through America’s supermarkets and restaurants, threatening to end the tamest year of food pricing in nearly two decades. Prices of staples including milk, beef, coffee, cocoa and sugar have risen sharply in recent months. And food makers and retailers including McDonald’s Corp., Kellogg Co. and Kroger Co. have begun to signal that they'll try to make consumers shoulder more of the higher costs for ingredients.”

No inflation right? .6 percent in 2 months. Is that a lot? But wait, without Wage inflation how can we have inflation? Again, bears here have been wrong wrong wrong.

http://www.cnbc.com/id/40135092

"Pricing survey shows showed a 0.6 percent price increase in just the last two months, according to MKM Partners. At that rate, prices would be close to four percent higher a year from now, double the Fed’s mandate.
Prices of cotton, silver wheat, soybeans, corn are all up big this year. Cotton futures are up the most, climbing 90 percent so far in 2010. The price of silver is up 63 percent.
"

I am NOT an outlier. The "typical" consumer purchases every year at least one of the following: a car, TV, video game machine, bluray player, major appliance, cell phone, etc. Probably several of these. Plus they consume cable TV, cell phone minutes, Internet bandwidth. All of these are cheaper per feature/function over time. As have been baby clothes, furniture, and a whole host of goods thanks to globalization and JIT production.

And that same WSJ article says CONSUMER prices HAVE NOT risen for food, but that they MAY. WHEN THEY DO, it will show up in CPI as measured now EXACTLY as it would have in1980 - because food is not a good Hedonics covers.

"In case you don’t like the CPI:

Turkey and the trimmings won’t cost much more this year than last, according to the Virginia Farm Bureau, but some Virginians think the estimate is missing some important ingredients for a feast.

The bureau says it should cost $43.39 to serve a 16-pound turkey, stuffing, sweet potatoes, rolls, cranberries and peas for 10 adults. The price also includes a tray of carrots and celery, as well as pumpkin pie with whipped cream.

Virginia officials say its survey of grocery stores indicates all that food will cost on average 1 cent more this year than it did last year, when the cost of Thanksgiving dinner fell for the first time in three years.

In comparison, the American Farm Bureau said the average national cost of Thanksgiving dinner this year is $43.47, a 56-cent price increase from last year. [that's a 1.3 percent rise -- PK] The survey was first conducted in 1986 and is intended to be an informal gauge of price trends around the nation.
Hyperinflation!"

http://www.businessweek.com/ap/financialnews/D9JEQV6G0.htm

Pk being krugman. Damn facts!!!!

On another topic. The current Honda Accord uses multi-link suspension. It used to use a double wishbone arrangement which is common on more expensive cars. The current BMW 3 SERIES uses double wishbone, but the 2012 F30 replacement will follow Honda's strategy and go with multi-link. The reason is to save money. It's a cheaper product and BMW continues to use double wishbone on the 5 & 7 series.

Does the govt engage in reverse Hedonism when car companies decontent cars or do things under the covers that reduce the value of a car?

to link to the gold story: inflation is obviously heavily manipulated to the downside. no need to argue unless you live on corporate account. interest rates are manipulated in the downside (fed rate ZIRP and monetization of long bonds). therefore REAL interest rates are negative.
Conclusion?: buy gold and get a big mortgage. (that is shorting the underlying value of the currency being destroyed)

Good points nicercatch. With the one caveat that liquidity and cost of carry are maintained.

> interest rates are manipulated in the downside (fed rate ZIRP and monetization of long bonds). therefore REAL interest rates are negative. Conclusion?: buy gold and get a big mortgage.

Only if you believe that the multiplier effect will work on your side. Deleveraging a massive credit bubble is very deflationary and kills the multiplier effect. Ben can print money, but doesn't have a say about whether we put it under a mattress.

Finance Guy, Considering Treasury Rates, Mortgage Rates, municipal bond yields, high yield corporate bond rates today, why are we in closer to deflation and not another bubble?

"Does the govt engage in reverse Hedonism when car companies decontent cars or do things under the covers that reduce the value of a car?"

You asked this before, and the answer is yes.

Riversider: why are we in closer to deflation and not another bubble?

> Deleveraging a massive credit bubble is very deflationary and kills the multiplier effect.

Basically you have deflation each time a highly-leveraged credit bubble pops, deleveraging is a strong force.

Well, that might have been a legitimate concern two years ago Finance Guy, but since then debt prices have recovered substantially. Keep in mind that the u.s. consumer was over-leveraged going into the credit crisis, so seeing a return to more normal leverage(either through default, debt restructure or savings) is normal and not a terrible thing as the word "deflation" has come to mean.

> Keep in mind that the u.s. consumer was over-leveraged going into the credit crisis, so seeing a return to more normal leverage(either through default, debt restructure or savings) is normal and not a terrible thing as the word "deflation" has come to mean.

The leverage and lack of real savings during the bubble were the terrible thing, not the process to the new normal. There's nothing terrible about deflation for players the FED doesn't care about (workers on stable ex-FIRE sectors that save and rented, for example). Bernanke would love for everybody to think that deflation and lower asset prices are the horror, they are a pre-requisite for the economy to reset imho.

By the way, cpi declined in the 1950's and it wasn't terrible.

http://www.mybudget360.com/wp-content/uploads/2010/10/cpi.png

deflation was a staple during USA biggest growth periods, as it was industrializing... demonizing deflation is stupid, but expected from Bernanke & Co.

No, actually the deflation of the 1870s-1890s was rather exceptional in this regard. This was like basic High School history. Although I did take AP history, I still remember this point rather vividly.

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

"New research suggests that misinformed people rarely change their minds when presented with the facts — and often become even more attached to their beliefs. The finding raises questions about a key principle of a strong democracy: that a well-informed electorate is best."

http://www.ritholtz.com/blog/2010/11/your-brain-is-broken/

So when you sold in 2004, that was a good idea, right? Because if prices are just approaching 2005/4 prices today, then still to break even you need to somehow adjust for the excess rent you paid from 2004 to 2010.

Well we all know you'll make your husband work it off for you. And blame everyone on streeteasy.

happy to see you back AR!

great radio show! wonder how it affects investment and how much of the "cut losses early" is successful in part due to cognitive dissonance.

More Ritholtz
-----------------

One of my favorite 91-percenters, Fusion IQ's Barry Ritholtz, puts it amusingly: "If you take everything out of the CPI basket that's going up in price, sure, you have no inflation!" Which is sort of like suggesting that if you take away insurgent fighting and the large U.S. military presence, there's no war in Iraq. Not that I want to give anyone in the Oval Office ideas for creative rhetorical devices.

But Ritholtz is more concerned about the third scenario, in which the CPI isn't accurate in the first place. And the difference between the second and third scenario is the difference between miserable and horrible. People like Ritholtz are thinking of the 1996 Boskin Commission, which was established to determine the accuracy of the CPI. The commission concluded that the CPI overstated inflation by 1.1%, and methodologies were adjusted to reflect that. Critics of the Boskin Commission suggest that the basis upon which the CPI was revised doesn't account for the way people actually purchase and consume products. The commission pointed to four biases inherent in the way the CPI was determined that supposedly contribute to overstatement - among them, a bias that doesn't take into account substitution of one good for another and a bias that fails to take into account increases in quality that are reflected in price increases.

But the Boskin critics note several reasonable exceptions to those biases. The Boskin Commission suggests that when customers substitute one good for another, the CPI should treat those goods equally. If Dana orders a hanger steak instead of his beloved filet mignon because the hanger steak is cheaper, Boskin argues that the hanger steak prices should be compared with previous filet mignon prices. It's all beef, right? But critics of the Boskin report point to areas where substitution is so price-driven that consumers are pushed out of the category altogether. What happens when the consumer gives up steak entirely and switches to chicken? (Or to use a scarier example, goes from some health insurance to no health insurance?)

Boskin also says that whatever you're paying in price increases is offset by the additional pleasure you get from better goods. To put it another way, you adjust for improvement in quality over time - a practice called hedonic pricing. So, for example, energy price increases due to federally mandated environmental measures are offset by how much we all sit around enjoying the cleaner environment. (And there's a lot of sitting, because it's not like we can afford to go anywhere anymore.) But, as critics note, quality increases over time are also a reflection of the fact that increased production typically means lower prices, thanks to economies of scale. This may be a matter of splitting methodological hairs, but if it isn't, aggressive estimates put the non-Boskinized actual inflation rate north of 7%. (The We're All Gonna Die estimate is more like 10%, but let's not push it.)

Lest you worry about your future purchasing power, rest assured that your $600 Bush-administered tax rebate will be in the mail shortly, at which point you may be able to afford filet mignon at the Palm. On the downside, it may cost $600 by the time you get that check.

http://money.cnn.com/2008/03/31/magazines/fortune/spiers_cpi.fortune/

great, rs, quote a pre-crash 03/08 article. how current of you.

"Deflation, not inflation, is present but apparently not accounted for." august of 2010

http://www.ritholtz.com/blog/2010/08/cpi-crb-do-not-disprove-deflation/

A.R.
I see your time time away from Easy Street has not mellowed your temperament. Welcome back!!
I look forward to your vitriol!!

the problem is that you're still lying, endlessly posting the same thing and completely clueless.

This is a quixotic battle. Every major economy uses hedonics when adjusted CPI, and for good reason. W

It lowers payments Gov't payments which are indexed to it?

Private economists overwhelmingly favor it too.

Anyway, on to food which is NOT covered by Hedonics...

"Thanksgiving Dinner Costs Up Slightly this Year....

Menu items for a classic Thanksgiving dinner -- including turkey, stuffing, cranberries, pumpkin pie and all the basic trimmings -- increased in price by about 1.3% in price this year..."

http://www.foxbusiness.com/markets/2010/11/15/thanksgiving-dinner-costs-slightly/

when there was real inflation in the late 70's and early 80's there were no stupid debates about whether or not it was happening. it was happening and it was clear to everyone. the debate was about what to do and whether it would work but never about whether it was real.

and when it stopped, it wasn't because the government fucked with the statistics.

http://www.bloomberg.com/news/2010-11-12/turkey-jumps-to-record-before-thanksgiving-urner-barry-says.html

Americans will be paying more for their Thanksgiving turkeys this month after rising feed costs led to reduced output in the U.S.

U.S. wholesale, frozen turkeys jumped to $1.09 a pound on average yesterday, the highest price ever and up 28 percent from a year earlier, according to Russell Whitman, the vice president of the poultry division at commodity researcher Urner Barry in Toms River, New Jersey.

At the end of September, stockpiles of turkey meat slid 23 percent from a year earlier, government data show. Production will decline 1.3 percent this year to 5.514 billion pounds (2.5 million metric tons), the U.S. Department of Agriculture said on Nov. 9. Before today, the price of corn, which makes up about 70 percent of turkey feed, was up 47 percent in the past year.

“The fundamental reason why you’re seeing record-high turkey prices is the fact we’re seeing record-high costs of raising turkeys,” said Tom Elam, president of FarmEcon LLC, an agriculture and food-industry consultant in Carmel, Indiana. “When both stocks are down and production is down, then you get a double hit on the amount available to be consumed.”

Retailers in the U.S. sold whole frozen turkeys for an average of $1.57 a pound in September, up 7.7 percent from a year earlier and the highest level since at least 1980, the Labor Department said on Oct. 15.

Higher Retail Price

While those government statistics don’t capture the holiday discounting by grocers this month, retail prices probably will be up 20 percent from Thanksgiving last year, said FarmEcon’s Elam

WHOLESALE prices are part of PP!, not CPI. How fricking moronic.

True, prices may not have been passed on this holiday, but its a shoe size bet that prices will rise over the next twelve months to reflect cost. Over the long term producers either pass on costs or shut their business which incidentally lowers supply which yet again supports higher prices.---ECO 101

Or...or...

Or....

Prices go down.

Time will tell.

Your track record speaks for itself.

You mean my gold prediction!!!!!!

Or my prediction that nyc home prices wouldn't decline by more than low single digits over the last several months!!!!!!!

^^^^Producer prices are not the only factor in consumer prices. Depending on the good or service, raw materials can be anywhere from less than 1% to 90% of the consumer price. You are just silly.

...Hedon_ _ _...

http://www.marketwatch.com/story/us-producer-prices-rise-04-in-october-2010-11-16?siteid=yhoof

Couple of quick points
1st) Governments like about inflation all the time

Officially, inflation was 4.4pc in October, and may reach 5pc in November, but it is to hard find anybody in China who believes it is that low. Vegetables have risen 20pc in a month.
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/8182605/Chinas-credit-bubble-on-borrowed-time-as-inflation-bites.html

2) Bernanke went on 60 minutes saying he could 100% control inflation, which is absurd, there's no way
anyone could be 100% confident of being able to do that. If it were that easy, why did we have inflation
in the 70s/80's and why did it take Vogel so long to control it?

Q: Can you act quickly enough to prevent inflation from getting out of control?

A: We could raise interest rates in 15 minutes if we have to. So, there really is no problem with raising rates, tightening monetary policy, slowing the economy, reducing inflation, at the appropriate time. Now, that time is not now.

Q: You have what degree of confidence in your ability to control this?

A: One hundred percent.
http://blogs.wsj.com/economics/2010/12/05/bernanke-on-cbss-60-minutes/

he looked terrible in that interview..his face was shaking the whole time

http://abcnews.go.com/Business/Business/consumer-reports-investigates-shrinking-household-products/story?id=12537221

check out the ABC video.
---------------------
If so, your mind is not playing tricks on you. And the kids are not playing hide-and-seek with the household goods. The products are shrinking.

"From toothpaste to tuna fish, hot dogs to hand soap, companies have been shaving ounces and inches from packages for years," according to a study released by Consumer Reports.

In some cases, the reduction was as much as 20 percent, according to the study. To keep consumers from noticing the incredible disappearing act, manufacturers have grown clever about packaging.

"It's one of the oldest tricks in the books," says Sally Greenberg, executive director at National Consumers League, a consumer organization based in Washington, D.C. "It's a very common practice. I think it's unpopular and I advise companies not to do it."

With fuel prices and the cost of ingredients rising, companies may add a little air with your next ice cream purchase, or they may add a slight indentation to a container to shave the size of the product.

"I think it's deceptive on the part of companies. If they have to pass prices along, they should explain 'we have higher fuel prices and we have to make up the price somehow,'" says Greenberg. "I think it makes consumers mad, it makes them cynical about being deceived and consumers would appreciate a more straight-forward approach," says Greenberg.

"Manufacturers make subtle changes to the packages but generally keep the price the same because when prices rise, buyers often seek cheaper alternatives. And the bottom line is that consumers are more attuned to changes in price than packaging," according to Consumer Reports.

The report in the February edition of Consumer Reports magazine suggests consumers consider switching unit prices, stock up and save, buy in bulk or contact the company.

"Unit pricing is one of the great consumer victories," says Greenberg. "It does the work for you. You don't have to be a computer genius to do the math."

Sigh. Inflation calculations take price per unit into account, dummy. Same price, smaller package = price increase, always.

On the other hand...the average cable bill has gone up 63% in 10 years...but the average cable household has more than twice as many overall channels, and more than ten times as many HD channels.

So the quantity and quality of what they are getting per overall channel and per HD channel means the price of cable has gone down.

What about the costs of telecommunication, education, aviation, titilation?
My last memory was $300 but, that was back in the day. Spitzer was spending about $4300.
That's up 1,433%!!!
I've read all the reports...I know...no inflation.

On the other hand...the average cable bill has gone up 63% in 10 years...but the average cable household has more than twice as many overall channels, and more than ten times as many HD channels.

So the quantity and quality of what they are getting per overall channel and per HD channel means the price of cable has gone down.
-----------------
OK, Let's take your point. Apple, Time Warner, Samsung have figured out ways of delivering products and services cheaper. This should be a good thing, except our Fed reacts that falling prices are bad, so engineers an inflation that raises not those prices, but the costs of fueling our cars and homes, makes our clothes more expensive and raises the costs of feeding our families.

Lower prices should be a good thing, because it allows us to stretch our budge farther, and set aside funds for savings which funds future investments, but instead it's deemed bad. I understand borrowers want inflation since it makes borrowed funds cheaper to repay in the future... Now who in our country is in debt? Perhaps it's.. the Federal Reserve, Our Federal , local and state governments?

The U.S. bond market has begun sending a message that inflation risks are rising and the Federal Reserve may be too slow to act, potentially marking a significant turning point in the economic recovery.

In the past week, Treasury-bond yields have jumped to their highest levels since last spring. Yields on 10-year Treasurys surpassed 3.5% and 30-year yields broke through 4.7%, which makes some worry could mean rates will march even higher.

http://online.wsj.com/article/SB10001424052748703989504576128130543513562.html?mod=googlenews_wsj

4.7% is just about as low as 30 year bonds have EVER been, other than in the last two years. We did NOT have runaway hyper-inflation during the Bush, Clinton, or Bush 2 years when 30 year bond yields were 200-BP higher.

The most recent yeild on 10-year USTs is 3.640%. 10-year TIPs are at 1.303%. That put the expected 10-year inflation rate, per the bond market, at 2.3%. 30 year TIPs are at 2.172%. Putting the 30 year inflation expectation per the bond market, at at about 2.5%.

For 5 years, the bond market has inflation at under 2%. For FIVE YEARS!

The average inflation rate in the US since 1914 has been 3.24%.

The bond market is NOT PREDICTING RUNAWAY INFLATION, dummy!

Between gov't fudging of inflation data and Fed involvement in the treasury market not sure that claim is iron clad. The fact that eh ten year is going up despite gov't efforts to point it the other way says a great deal.

you're not sure that

4.7% is just about as low as 30 year bonds have EVER been, other than in the last two years. ?

idiot

So how does the increaseed real yields on the ten year and ten year tips come across?
Less demand for Safety or increase expectation for inflation that won't be captured in the CPI?

And yet the bond market believes CPI, not the gold bugs. They do NOT believe Argentina's figures, as you can see from THEIR yields. The market knows best.

Well, perhaps they believe the CPI ( a bit less)

When a country where they DON'T believe the local CPI, Argentina peso denominated bonds versus Yankee bonds show this. They believe US CPI, not Argentina's official numbers.

On a seperate note, Credit Default Protection on United States debt is more expensive than that of Switzerland.

Kraft Foods, the world’s second-largest food company by sales, lowered its 2011 earnings growth forecast as it faces what Irene Rosenfeld, chief executive, called “significant input cost inflation and persistent consumer weakness in many markets”.

Kraft on Thursday reported $489m in additional input costs during its fourth quarter, and that it was expecting year-on-year inflation in its costs to be in the high single digits.

http://www.ft.com/cms/s/0/aff44962-3561-11e0-aa6c-00144feabdc0.html#axzz1DMDd4PgR

But they are NOT raising the costs to the consumer. Raw materials are less than 20% of Kraft's (or just about any food maker's) expenses, in any event.

Feb. 14 (Bloomberg) -- Forget Egypt for a moment. Skip the water crisis in China. Look past angst on the streets of Bangladesh. If you want to see how extreme the effects of surging food prices are becoming, look to wealthy Japan.

So big are the increases that economists are buzzing about them pushing deflationary Japan toward inflation. Yes, rising costs for commodities such as wheat, corn and coffee might do what trillions of dollars of central-bank liquidity couldn’t.

Yet the economic consequences of food prices pale in comparison with the social ones. Nowhere could the fallout be greater than Asia, where a critical mass of those living on less than $2 dollars a day reside. It might have major implications for Asia’s debt outlook. It may have even bigger ones for leaders hoping to keep the peace and avoid mass protests.

What a difference a few months can make. Back in, say, October, the chatter was about Asia’s invulnerability to Wall Street’s woes. Now, governments in Jakarta, Manila and New Delhi are grappling with their own subprime crisis of sorts. This one reflects a toxic mix of suboptimal food stocks, exploding demand, wacky weather and zero interest rates around the globe.

It’s not hyperbole when Nouriel Roubini, the New York University economist who predicted the U.S. financial crisis, says surging food and energy costs are stoking emerging-market inflation that’s serious enough to topple governments. Hosni Mubarak over in Egypt can attest to that.

http://www.businessweek.com/news/2011-02-13/roubini-s-next-crisis-is-scary-food-for-thought-william-pesek.html

of course, riversider always leaves out the key lines

"What’s killing households surviving on a few dollars a day is price volatility. If you spend almost half of your income to fill bellies, a 10 percent surge in cooking oil, wheat or chili peppers is devastating."

what percentage of the united states lives on a few dollars per day?

But they are NOT raising the costs to the consumer

....they will. and upon a trip to fairway today, i noticed yet another increase in the price of cream cheese(second in a year).

Food can be exported. If the Chinese will pay more for wheat than Americans after factoring in transportation costs, then our wheat goes over-seas. The economics are quite simple.

Cheddar cheese has gone up 24% since 1986, or 0.87% a year:

http://future.aae.wisc.edu/data/monthly_values/by_area/14?area=US&grid=true&tab=prices

CPI during that same time is up 2x, or 2.87% a year. Lower rate by 3x.

Were you bitching and moaning about deflation all those years based on your cheese purchases at Fairway?

interesting chart. clearly illuminates the reason to not count food prices in core inflation. jan 2011 is 8% lower than spot price in august 1996.

Facts are stubborn things.

http://www.tutor2u.net/blog/images/uploads/milk_producer_price.gif

Dairy prices --3.7 percent above the December 2009 level,5.1 percent above last December’s prices; cheese prices 4.3 percent above last December’s level. In 2009, dairy prices were up only 1.1 percent from 2009 (following a 6.4 percent decline from 2008 to 2009). However, higher projected prices for farm milk in 2011 will lead to increases of 4.5 to 5.5 percent for retail dairy products in 2011 based on current ERS forecasts.

And these are just the official numbers. I don't each much cheddar cheese not being from upstate, but cream cheese was up this week $0.60 for a 12 ounce package.

Ino-, You can choose to look back at ten years of data and say forward looking inflation will be low, or you can look at the last several months and admit increasing cost pressures. Your choice.

Blame it on the Onion Futures Act.

>like river douche bag

Come on, you can do better than that.

"Facts are stubborn things.

http://www.tutor2u.net/blog/images/uploads/milk_producer_price.gif"

OK, let's talk facts. In your own graph, we see a level of 104 in late 1997 and 142.5 at the end of 2007. Works out to 3.1% a year. Does this seem high to you?

Not high, but with interest rates where they are, 3.1% isn't insignificant.