The Glade 4.0

http://www.reuters.com/article/2011/03/ ... D520110311



SO the Fed does not look at fuel and food...probably the two most immediate and wallet hitting costs to the family?

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"Life isn't divided into genres. It's a horrifying, romantic, tragic, comical, science-fiction cowboy detective novel. You know, with a bit of pornography if you're lucky."
— Alan Moore

The person who quipped "I can't eat an iPad" probably gets plenty of food every day.

Dudley is completely correct that prices are falling with anything related to information technology, which has been an ongoing trend for decades.

Uncle Fester:

Yes, and for good reason IMHO.

This just in: Water is wet.

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"Aaaah! Emotions are weird!" - Amdee
"... Mirrorshades prevent the forces of normalcy from realizing that one is crazed and possibly dangerous. They are the symbol of the sun-staring visionary, the biker, the rocker, the policeman, and similar outlaws." - Bruce Sterling, preface to Mirrorshades

But how often do you buy technology? A few purchases a year max I would say. Yet, it's being weighted in the CPI and fuel and food costs are left out, two of the most common purchases made every day or every week. Khross was right. This is all done to make the inflation rate look low. And on top of it, anything tied to the CPI, such as i-bonds are kept lower. This is insane. This would be like me setting my own credit card rate based on how quickly I think I'm paying the card off, but excluding my food and fuel costs.

Core inflation is not useful when you call your measurement the CONSUMER PRICE INDEX. Consumers fyi, buy food.

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"...but there exists also in the human heart a depraved taste for equality, which impels the weak to attempt to lower the powerful to their own level and reduces men to prefer equality in slavery to inequality with freedom." - De Tocqueville

Let's see... I pay monthly broadband and tv and for my cell phone which adds up to a lot. I recently bought a computer that cost over $4k, a new smart phone, monitor, etc.

Wow apparently talking to the Fed is like talking to Lex. Can we medicate them?

Oh and Lex is on ignore so I assume he is making some assinine statement about how life is much better because computers, cell phones, calculator-watches are cheaper or some such crap.

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According to the BLS, the average American household spends about 13% of its income on food.

http://www.creditloan.com/infographics/how-the-average-consumer-spends-their-paycheck/

So it's okay to ignore 1/8 of the economy when dealing with inflation or only when it supports your agenda?

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I prefer to think of them as "Fighting evil in another dimension"

If that comment was to me, I think you're reading more into my post than is meant to be there. I was just offering up some numbers to provide a benchmark for the conversation, not advocating any particular position on the issue. Indeed, I don't really have a firm position on the issue, though if anything, I tend to lean towards thinking inflation measures should reflect actual consumption patterns and thus include food and energy even if they are more volatile. That said, I do think the conspiracy theory as to why the government doesn't do that is, like most conspiracy theories, silly.

And my 17" crt monitor still works, so would my Blackberry from 3 years ago. I can still surf the web and do what 95% of the country needs a laptop for on an old ibm thinkpad.

I can't live with food I bought 3 years ago for as long. Tech is far less consumable, and is a poor measure, hence why its being used to skew the numbers. The things you list Lex, as much as it may hurt your technocrat ego to hear, are low on the heirchy of needs.

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A man who has nothing for which he is willing to fight, nothing which is more important than his own personal safety, is a miserable creature and has no chance of being free unless made and kept so by the exertions of better men than himself. ~ John Stuart Mill

if you decided to buy those same parts the price would be much cheaper.

CPI has never included food/energy prices, it's not like Obama's administration changed this in order to lie to people. It's not dishonest to strip out food/energy prices, I read somewhere that at one point in the 90s that if food/energy prices had been included the CPI would have shown deflation right during the run up to the dot com crash.

I'm not interested in wild theories, nor am I trying to pick on you, Dave. I'm just wondering why those people (if you aren't one of them no problem) think it's okay to ignore that chunk of the economy. I've had the highest winter electric bill in three years in my apartment, and I watch food prices creep up. I'm not happy that the administration is singing "happy days are here again" when there is practical evidence to the contrary.

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I prefer to think of them as "Fighting evil in another dimension"

I don't think anyone mentioned any administration until you Xeq.

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"...but there exists also in the human heart a depraved taste for equality, which impels the weak to attempt to lower the powerful to their own level and reduces men to prefer equality in slavery to inequality with freedom." - De Tocqueville

It seems to me that was explained in the OP. They remove them because they are volatile and likely artificially increase or decrease the overall trend. The Fed is generally interested in longer term planning, so it makes sense for why they remove it. If there are longer term food/gas issues, those will bleed into the rates of other goods as people are forced to change their spending habits.

Now, you can certainly disagree with their approach, but it seems pretty straightforward to me as to why they do it that way.

"Core Inflation" is simply a political misnomer that allows your government and it's marginally attached independent agencies (the Fed) to lie to you.Really, because I don't think you understand what happens when you remove volatile markets from real inflation calculations. The Food Industry accounts for 10% of U.S. GDP. Energy Industries in the United States combine for nearly 22% of GDP. So, sure, Inflation looks just spiffy when you cut a third of spending out of the whole.

We're talking about trillions of dollars being ignored because they're "volatile". Never mind that we normalize consumption of both productions the same way we homogenize employment and housing costs across the nation on a regular basis. "Core Inflation" just means "inflation most of you don't actually have any interest in."

By the by, RangerDave, 13% assumes one makes median income in the United States, which is $50,000 per household. That percentage increases geometrically as earning decreases below median. It's also important to note that the Bell Curve standardization for income horrendously skews actual spending habits on food, housing, and staple goods. Quite honestly ...

Food and Energy Inflation are the components that most hit 80% of the population.

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Khross,

You assume that I agree with how they perform their review. All I'm saying is that their reasoning is pretty clear.

Really, because you aren't demonstrating an understanding of their reasoning from the posts you've made in this thread.

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Thanks Khross, I've seen the light. I understand now that it's all a government conspiracy to dupe the American people and hold us all back from our individual greatness. How could I have been so blind...

You can be flippant all you want, but that's closer to the truth than anything you've said so far in this thread. Governments have a vested interest in maintaining their own power base. This is a universal truth of human society for the last 10,000 years. A government will continue perpetuate itself until it implodes under the weight of its own failings or it is violently removed from power. Neither the United States, nor the Democratic Party of America, are exempt from these truths.

Seriously, why don't you explain their reasoning in economic terms. Try to ...

In fact, do it while addressing Supply and Demand and correcting for regulatory pressures on market behavior in every non-volatile sector of the economy, per Federal Reserve classifications.

And, then, when you're done, correct RangerDave's link for market and currency losses against say ... 1958 U.S. Dollars.

The simple truth is that removing so-called volatile markets from the CPI and Core Inflation Index allows the government claim near 0 inflation while the cost of living steadily rises in front of your eyes.

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I honestly still don't see the concerted effort to deceive people. The BLS does calculate food and energy price inflation and reports it.

http://www.bls.gov/news.release/cpi.nr0.htm

The "all items" inflation rate for the last 12 months is only 1% higher than the "all items less food and energy" inflation rate. It's not like the government is trying to hide something ridiculous like 10% inflation by reporting it as 1%.

Xequecal:

Actually, they are lying and saying that 20% is 1% ...

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What are you basing this on? Just because energy prices go up 15-30% doesn't mean inflation is 15-30%. You do have count the decrease in the price of other things. The CPI report even admits that energy prices went up 15-30%.

I don't know if the BLS statistics are totally made up but the assertion that they're trying to skew the data by not reporting food and energy price inflation at all is ridiculous. They do report that.