Inflation? What inflation? Let's look at facts.

[rodmike9]

It is possible to have deflation, stagflation, and inflation, et cetera, at the same time.

The "printed" money will filter into different asset classes in different proportions. I really think most people don't understand this simple concept. Inflation is often viewed by the masses as a singular phenomenon.

(i use quotes because money monetary bases are artificially expanded using various methods, not necessarily running the printing presses to produce more physical bills)

 

[Kassz007]

Quote from MKTrader:

My quote said "hyper inflation." Sheesh. No, I think we're seeing inflation now. It's not full-blown hyper type. That often takes years to develop...but comes with little or no warning.

Again, though, you bring up CPI like it's the ultimate inflation measure then refuse to address problems with it. I reject CPI as a meaningful inflation indicator. The burden of proof is on you.

The reading comprehension problems here are yours and not anyone else's.

If you reject CPI and PPI as a measure of inflation, then what do YOU use to measure inflation? Are you basing it soley on some commodities rising?

The fact of the matter is that CPI and PPI are probably the best ways we have of measuring and quantifying inflation/deflation AS A WHOLE. I'm not just talking about some commodity prices...

To your last remark - I can read just fine. Perhaps we can refrain from meaningless insults so as to not waste everyone's time? Thanks...

 

[S2007S]

HAHA yea right no inflation, throw those useless cpi numbers out and go to the grocery store. You dont need to go far to see inflation, I go to the food store at least once a week and notice the huge upswing in prices.


Samples of prices I saw on the following products last week:

2 BARS of dove soap $1.99.
Ritz Crakers $4.20
Bag of Onions $3.99
Can of Corn $1.59
Hellman Mayo $5.20
Simply OJ $4.19
2% "STORE BRAND" milk $2.29

Fuck the facts of what the CPI is, the proof is right down the street at your local stores. Gas by the way near me is over $3.10 a gallon.

 

[Kassz007]

Quote from Debaser82:


I don't get the whole inflation deflation craze really...

If you don't invest there is nothing you can do whatever happens and if you do trade/invest the correlation between risk assets and inflation deflation is far less obvious then people think.

What I take from this is nobody ever got rich from holding cash and a lot of people have gone broke putting all their money into a single sector or asset so try to avoid being in any of those categories and you should come out ok eitherway...

Inflation/deflation considerations do not normally factor into my short term trading either, but I do think it is important on a macro level, especially for a country so highly indebted such as the USA. As we all know, prolonged deflation would make it significantly more difficult for the USA to repay it's debts. I would argue that even flat inflation will make it significantly difficult for the USA to repay it's debts. The alternative? Pump money into the economy and hope for moderate inflation to ease the debt repayment process. The Fed then hopes to reign in that money when inflation is at a moderate level, before it runs out of control. Will the Fed be effective in this strategy? Only time will tell.

Again, the purpose of this thread is a counter voice to the opposition of some to QE2. The biggest counter argument to QE2 is because we already have inflation, and the next easing cycle will send it out of control. I am simply stating that the facts right here and now do not support this argument.

The only argument I've heard so far for inflation is rising commodity prices. While that is something to keep an eye on, and could shake things up in the future, it is not causing economy-wide inflation at this moment.

 

[Kassz007]

Quote from rodmike9:

It is possible to have deflation, stagflation, and inflation, et cetera, at the same time.

The "printed" money will filter into different asset classes in different proportions. I really think most people don't understand this simple concept. Inflation is often viewed by the masses as a singular phenomenon.

(i use quotes because money monetary bases are artificially expanded using various methods, not necessarily running the printing presses to produce more physical bills)

Agreed. But if you look at all of the various sectors in the economy and the resulting price increases/decreases of all of them you get.....CPI/PPI. Regardless of if you "believe" the number or not, it's the best information we have to go by for the economy as a whole.

 

[Kassz007]

Quote from S2007S:

HAHA yea right no inflation, throw those useless cpi numbers out and go to the grocery store. You dont need to go far to see inflation, I go to the food store at least once a week and notice the huge upswing in prices.


Samples of prices I saw on the following products last week:

2 BARS of dove soap $1.99.
Ritz Crakers $4.20
Bag of Onions $3.99
Can of Corn $1.59
Hellman Mayo $5.20
Simply OJ $4.19
2% "STORE BRAND" milk $2.29

Fuck the facts of what the CPI is, the proof is right down the street at your local stores. Gas by the way near me is over $3.10 a gallon.

Your anecdotal evidence is useless. You paying more for Ritz crackers at your local grocery store does not equal economy-wide inflation. The rise in the price of a barrel of oil has already been addressed. I have accepted and acknowledged the fact that certain commodities are increasing in value. Again, this does not signal economy-wide inflation.

 

[chartman]

Quote from Kassz007:

Your anecdotal evidence is useless. You paying more for Ritz crackers at your local grocery store does not equal economy-wide inflation.

CPI is supposely a measure of CONSUMER prices and not an economy wide price of materials, etc.... The posting concerning prices at the grocery store is a valid example of consumer price inflation. I know the index has been changed to now it is no longer a true reflection of only consumer prices.

 

[denner]

Quote from Kassz007:

If you reject CPI and PPI as a measure of inflation, then what do YOU use to measure inflation? Are you basing it soley on some commodities rising?

The fact of the matter is that CPI and PPI are probably the best ways we have of measuring and quantifying inflation/deflation AS A WHOLE. I'm not just talking about some commodity prices...

To your last remark - I can read just fine. Perhaps we can refrain from meaningless insults so as to not waste everyone's time? Thanks...

Actually, your defense of these contrived inflation statistics is a waste of our time.

I can tell you first hand that the cost of goods rose dramatically during that 2003-07 period and yet, lo and behold, we were told there was little consumer inflation during that period as well.

I'm more convinced that you are either a bureaucrat in the Canadian government or some clueless academic, hell bent on promoting your Keynesian fantasies of perpetual monetary stimulus and the evils of deflation.

 

[sjfan]

So.... we are going to counter well documented and researched statistics with .... your personal observations? Let's see - did the price of personal computers rise or fall between 03-07; Were you able to buy detergent and paper towels at a higher or lower price at Costco in 2007 compared to at the neighbourhood CVS in 2003? etc....

So far, all the supposedly evidence that CPI is massively manipulated seem to come down to I KNOW BECAUSE I WAS THERE.... so the rest of us apparently weren't

Quote from denner:

Actually, your defense of these contrived inflation statistics is a waste of our time.

I can tell you first hand that the cost of goods rose dramatically during that 2003-07 period and yet, lo and behold, we were told there was little consumer inflation during that period as well.

I'm more convinced that you are either a bureaucrat in the Canadian government or some clueless academic, hell bent on promoting your Keynesian fantasies of perpetual monetary stimulus and the evils of deflation.

 

[Martinghoul]

Quote from MKTrader:
1) I said I agree with Ritholtz. Not sure if you agree or not. Bringing up gov't conspiracies is simply a red herring. Like other econ data, CPI has been adjusted and redefined many times over many administrations...and not because politicians have some great desire for a more accurate inflation indicator.

"Conspiracy theory" conjures up images of smoke-filled rooms, black helicopters, etc. None of that is necessary. But to say it hasn't been changed for political reasons is rather absurd.

Well, I do disagree with BR. Point is that I have seen all sorts of claims that CPI is manipulated etc. However, I am yet to see any specific evidence of this manipulation, a good in-depth analysis of the methods used and a meaningful alternative. The latter is changing with the Google CPI initiative (which, if I am not mistaken, was showing mild disinflation in the US since its inception; obv, it hasn't been around long enough yet).

2) Asset bubble doesn't appear to be popping since March 2009. I never said hyper-I is around the corner, only that it could be if QE/other printing goes unchecked and/or it isn't ultimately rejected by another big anti-inflation trade.

Well, then we agree that what's around the corner is the "unknown unknown". Could be inflation, but could equally be disinflation. Interestingly enough, the TIPS mkt is expecting low inflation for the next 5 to 10 years, fwiw (as I'm sure you're aware).