Where's the inflation? US CPI unexpectedly drops 0.1%

asiaprop · May 19, 2010

premature, thanks for the correction ;-)

Well, if I possessed a crystal ball I would be able to time the trade. I dont, but what I see in the short and medium term is an American consumer who is squeezed to the hilt. Longer term I think its impossible to ignore the fact that even our grand children (no matter in which industrialized country we live) will be busy repaying the debt that has been taken on board. Where in this equation could you possibly ignore inflation at a later point in time?

Quote from Kassz007:

I think you mean calls for inflation are PREmature. In which case I agree with you. However, I do not posess a crystal ball like you do. Surely you will be able to profit immensley since you already know that inflation going through the roof is a given?

efficiency · May 19, 2010

CPI is flawed. Basket of goods pegged to 1967. Excludes food and energy. Basics.

Try the PPI

Rising commodity prices are either reflected in higher end user prices OR reduced profit margins.

There can be inflation/disinflation/deflation simultaneously depending on sector.

Cost/push? Wage/pull? Nope, too many dollars chasing too few goods. Presses are running 24/7 with nothing backing them except the full faith in the US government. I've got a potrait of Barney Frank (eating a hot dog) under soft track lighting. It's right next to the topless portrait of Nancy Pelosi. Schwing!

Kassz007 · May 19, 2010

Quote from asiaprop:

premature, thanks for the correction ;-)

Well, if I possessed a crystal ball I would be able to time the trade. I dont, but what I see in the short and medium term is an American consumer who is squeezed to the hilt. Longer term I think its impossible to ignore the fact that even our grand children (no matter in which industrialized country we live) will be busy repaying the debt that has been taken on board. Where in this equation could you possibly ignore inflation at a later point in time?

I get your point. But why do you assume nobody will be able to do anything to combat inflation in the future?

Kassz007 · May 19, 2010

Quote from efficiency:

CPI is flawed. Basket of goods pegged to 1967. Excludes food and energy. Basics.

Actually you are wrong. CPI includes food and energy. CORE CPI excludes them. The decrease was in the CPI, which includes food and energy.

peilthetraveler · May 19, 2010

Quote from Kassz007:

I get your point. But why do you assume nobody will be able to do anything to combat inflation in the future?

Because anyone that does anything to combat inflation will be hated. Politicians do not want to be hated. Also, if you owed more money than anyone in the history of the world, and you knew there was no way to pay it back except maybe with inflation, what would you do?

Thats why nobody will do anything to combat inflation.

Covertibility · May 19, 2010

If you belive the CPI then you also belive the birth/death model.... the Lochness Monster, Big Foot, Santa Claus, and that George Washington was America's first president. I know noone here knows who the first president was. And no, John Hancock was the 2nd, just in case someone guesses him.

olias · May 19, 2010

Quote from peilthetraveler:

Because anyone that does anything to combat inflation will be hated. Politicians do not want to be hated. Also, if you owed more money than anyone in the history of the world, and you knew there was no way to pay it back except maybe with inflation, what would you do?

Thats why nobody will do anything to combat inflation.

that's actually a pretty good answer

efficiency · May 19, 2010

Quote from Kassz007:

Actually you are wrong. CPI includes food and energy. CORE CPI excludes them. The decrease was in the CPI, which includes food and energy.

You knew what I meant. Anal retentive.

The real point is the 1967 peg. No PC's no cell phones, textiles sitll made in the US (not at Asian labor rates). Host of other lifestyle (and hence purchases) differences with today.

It's still a flawed measure and lags the PPI. Wholesales prices are passed on faster than they are between retailers and consumers.

Kassz007 · May 19, 2010

Quote from peilthetraveler:

Because anyone that does anything to combat inflation will be hated. Politicians do not want to be hated. Also, if you owed more money than anyone in the history of the world, and you knew there was no way to pay it back except maybe with inflation, what would you do?

Thats why nobody will do anything to combat inflation.

I think you're wrong. Out of control inflation will bring about it's own negative political consequences.

Is it not possible that the Fed will target modest inflation? (i.e. what every central bank strives for).

Kassz007 · May 19, 2010

Quote from Covertibility:

If you belive the CPI then you also belive the birth/death model.... the Lochness Monster, Big Foot, Santa Claus, and that George Washington was America's first president. I know noone here knows who the first president was. And no, John Hancock was the 2nd, just in case someone guesses him.

OK, how do YOU measure inflation?