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Just happened across this bunch of drivel and this sentence caught my eye.
"Full employment refers to the lowest rate at which unemployment can go without sparking inflation. "
So I guess its happy times are here again for good as the people in power change the definition of full employment the same way they changed the way inflation is measured?
So I guess its happy times are here again for good as the people in power change the definition of full employment the same way they changed the way inflation is measured?
JohnChisum, can you go over how inflation used to be measured vs. now?
For one, they don't count energy and food anymore. It seems that ever since the 70's, they have been fiddling with the numbers.
Prices are going up steadily. The size of packaging is going down. Less product for more cost. This happened in the 70's too. Yet we are constantly told there is no inflation. It's hard to believe when you walk out of the grocery store with not very much and $100 less in your account.
Just happened across this bunch of drivel and this sentence caught my eye.
"Full employment refers to the lowest rate at which unemployment can go without sparking inflation. "
So I guess its happy times are here again for good as the people in power change the definition of full employment the same way they changed the way inflation is measured?
For one, they don't count energy and food anymore. It seems that ever since the 70's, they have been fiddling with the numbers.
Prices are going up steadily. The size of packaging is going down. Less product for more cost. This happened in the 70's too. Yet we are constantly told there is no inflation. It's hard to believe when you walk out of the grocery store with not very much and $100 less in your account.
Ding! That box of crackers was 16 ounces. Now the same size box holds 13 ounces. And that half-gallon of ice cream? It's a bit short of a half-gallon, these days. But the price is higher, not lower. I remember hamburger at .39 CENTS per pound. 1966. And gas? NINETEEN cents per gallon. No, that's not a guess. I explicitly and distinctly remember that price in 1972...... Now the fracking is killing the environment but alleviating the shortage. If the transport train doesn't explode. And it's plentiful, but still expensive. What happened to "supply and demand?" If there's a big bunch of it, it ought to be cheaper. Crap. http://www.bbc.com/news/world-us-canada-27387287
Thanks David for that link. The article does reference the fact that the methodology used to track inflation has changed. It has been a while since I went over to Shadowstats but that is just one website.
Crash makes the case simply. We feel it in our wallets. I remember when Campbells soup shrunk their can size back in the 70's and they did it again in the last couple of years or so. Everything was standardized back then. 16oz, 32oz, etc.
I have mentioned this before but I have a unique opportunity living overseas. I go home to the states at least once a year. During that time I can see the price changes. They went up a bit in 2012. In 2013 the wife and I both noticed a big jump in prices. This past year they seem to have leveled off. There has also been an explosion of fees and other money taking schemes instituted. Your municipality is probably charging more for services. Garbage, water, sewer etc. Rent a car and extra fees come into play that were never there like a facility service charge. They figure a dollar won't kill anyone but when everyone does it, they do add up.
My focus was on the way they now figure full employment. With that thinking, any politician can boast that everyone is working. The problem of course are all the people sitting at home listening to that bull. They know different.
Prices are going up steadily. The size of packaging is going down. Less product for more cost. This happened in the 70's too. Yet we are constantly told there is no inflation. It's hard to believe when you walk out of the grocery store with not very much and $100 less in your account.
I'm seeing substantial increases in food costs. And in "clever" ways, such as substantial decrease in product for the same price. The supermarket I go to has now eliminated the 10# bag of potatoes, and replaced it with an 8# bag for the same price, a 25% price increase. And two substantial price increases in yams in the past couple of months, permanently increasing the price by 33% in such a short period of time. If inflation is only 2%, how are 25% to 33% price increases in line with that? OK, someone will say that other things like computers are going down in price.......
"OK, someone will say that other things like computers are going down in price......."
It's inflation in what we need, deflation in what we don't. As for the computer part, there's always one of the most amusing hecklers:
"Dudley said said that while food prices may be rising, the cost of some other goods are going down, which evens out the overall inflation picture. The Fed's inflation estimates do not take into account volatile energy or food prices. The crowd was not impressed:
"Today you can buy an iPad 2 that costs the same as an iPad 1 that is twice as powerful," he said referring to Apple Inc's (AAPL.O) latest handheld tablet computer hitting stories on Friday.
"You have to look at the prices of all things," he said.
This prompted guffaws and widespread murmuring from the audience, with one audience member calling the comment "tone deaf."
That said, I think there is inflation in things like healthcare and food and other needs. As for the comment above, as funny as the iPad comment is, I think the "tone deaf" comment accurately describes all of these people screaming about how there's no inflation whatsoever. Health care's nuts - the cost of medicine has become obscene in this country. There's no inflation until prices go up and when they do it's explained away as "transitory" and "noise". I bet that's comforting for the people dealing with it.
I want these people who are talking about there's no inflation to go to a grocery store and explain to people why things aren't more expensive and I want to see the response they get.
Chocolate prices pretty much went up across the board from the majors by 7% recently (Hershey, Mars, Nestle.) That's an example of a company dealing with higher input costs. Even if the input cost situation works itself out a little, how much do you want to bet that they'll try to make the higher prices stick anyway?
================= The best is that the Federal Reserve's own cafeteria sent a memo about prices going up because of inflation:
"Over the past five years, many of you may have experience product price increases in grocery stores. Prices continue to rise between 3% – 33%. For the past eight years, The Reserve Center has been absorbing these increases. The last overall price increase in The Reserve Center cafeteria took place in 2006, followed by a limited increase on sugar-based products in 2012.
For the upcoming price increase, a thorough review of café items was conducted and, while some prices will remain flat, others will increase to recognize these market increases. The price increase will help The Reserve Center cafeteria continue to maintain high standards and service levels by providing quality products.'
The Fed should protest the cafeteria's price increases, telling them the rise in input costs are just "noise" and "transitory".
================
All I'll say is this: keep investing in needs - keep investing in healthcare, keep investing in energy, keep investing in food, keep investing in staples.
An example: I have an investment in Zoetis (ZTS), Pfizer's animal health spin-off, which is the largest animal healthcare co and one of only a couple of publicly traded ones. People are going to take their pets to the vet and farmers are going to vaccinate their herds.
free market price - A price determined purely by the forces of supply and demand without interference from an outside source, such as a government. This concept assumes that markets are efficient, which is not always true in practice.
I guess I should add that it has never seemed to me that inflation measured necessities to life but more life and lifestyle.
Comments
Prices are going up steadily. The size of packaging is going down. Less product for more cost. This happened in the 70's too. Yet we are constantly told there is no inflation. It's hard to believe when you walk out of the grocery store with not very much and $100 less in your account.
http://azizonomics.com/2013/06/01/the-trouble-with-shadowstats/
http://www.pricestats.com/us-series
All of things you mention are taken into account pretty fully.
http://www.bbc.com/news/world-us-canada-27387287
Crash makes the case simply. We feel it in our wallets. I remember when Campbells soup shrunk their can size back in the 70's and they did it again in the last couple of years or so. Everything was standardized back then. 16oz, 32oz, etc.
I have mentioned this before but I have a unique opportunity living overseas. I go home to the states at least once a year. During that time I can see the price changes. They went up a bit in 2012. In 2013 the wife and I both noticed a big jump in prices. This past year they seem to have leveled off. There has also been an explosion of fees and other money taking schemes instituted. Your municipality is probably charging more for services. Garbage, water, sewer etc. Rent a car and extra fees come into play that were never there like a facility service charge. They figure a dollar won't kill anyone but when everyone does it, they do add up.
My focus was on the way they now figure full employment. With that thinking, any politician can boast that everyone is working. The problem of course are all the people sitting at home listening to that bull. They know different.
It's inflation in what we need, deflation in what we don't. As for the computer part, there's always one of the most amusing hecklers:
"Dudley said said that while food prices may be rising, the cost of some other goods are going down, which evens out the overall inflation picture. The Fed's inflation estimates do not take into account volatile energy or food prices. The crowd was not impressed:
"Today you can buy an iPad 2 that costs the same as an iPad 1 that is twice as powerful," he said referring to Apple Inc's (AAPL.O) latest handheld tablet computer hitting stories on Friday.
"You have to look at the prices of all things," he said.
This prompted guffaws and widespread murmuring from the audience, with one audience member calling the comment "tone deaf."
"I can't eat an iPad," another quipped.
http://news.yahoo.com/blogs/lookout/fed-official-heckled-t-eat-ipad-20110311-122230-439.html
--------------------
That said, I think there is inflation in things like healthcare and food and other needs. As for the comment above, as funny as the iPad comment is, I think the "tone deaf" comment accurately describes all of these people screaming about how there's no inflation whatsoever. Health care's nuts - the cost of medicine has become obscene in this country. There's no inflation until prices go up and when they do it's explained away as "transitory" and "noise". I bet that's comforting for the people dealing with it.
I want these people who are talking about there's no inflation to go to a grocery store and explain to people why things aren't more expensive and I want to see the response they get.
Chocolate prices pretty much went up across the board from the majors by 7% recently (Hershey, Mars, Nestle.) That's an example of a company dealing with higher input costs. Even if the input cost situation works itself out a little, how much do you want to bet that they'll try to make the higher prices stick anyway?
=================
The best is that the Federal Reserve's own cafeteria sent a memo about prices going up because of inflation:
http://www.zerohedge.com/news/2014-05-24/federal-reserve-admits-truth-internal-memo-prices-continue-rise-between-3-and-33
"Over the past five years, many of you may have experience product price increases in grocery stores. Prices continue to rise between 3% – 33%. For the past eight years, The Reserve Center has been absorbing these increases. The last overall price increase in The Reserve Center cafeteria took place in 2006, followed by a limited increase on sugar-based products in 2012.
For the upcoming price increase, a thorough review of café items was conducted and, while some prices will remain flat, others will increase to recognize these market increases. The price increase will help The Reserve Center cafeteria continue to maintain high standards and service levels by providing quality products.'
The Fed should protest the cafeteria's price increases, telling them the rise in input costs are just "noise" and "transitory".
================
All I'll say is this: keep investing in needs - keep investing in healthcare, keep investing in energy, keep investing in food, keep investing in staples.
An example: I have an investment in Zoetis (ZTS), Pfizer's animal health spin-off, which is the largest animal healthcare co and one of only a couple of publicly traded ones. People are going to take their pets to the vet and farmers are going to vaccinate their herds.
investorwords.com/5584/free_market_price.html I guess I should add that it has never seemed to me that inflation measured necessities to life but more life and lifestyle.
http://www.bls.gov/news.release/cpi.nr0.htm