Timba my point is those eating out the most, flying the most, buying the most expensive cars and living in bubble areas are those that are trying to tell me that CPI inflation is enormously understated. Some but not all of those people act as if all that is typical.
Unfortunately, for all I know it may be more typical than I think. But if one can not afford to eat out, the the solution is easy enough: one should not eat out, or if they do so go to Pizza Hut on Family night Tuesday or something. Believe it or not I actually like Pizza hut.
Unfortunately the problem is living on the edge as in buying more car than one can afford, more house than one can afford, more everything than one can afford has permeated everywhere. It's as if everyone thought (or acted)as if gasoline, heating bills, insurance etc etc would never go up. Well they have and unfortunately wages have not kept up except for those at the top end.
I suppose this discussion brings up another point. I keep asking GST about and he has not nor will he ever answer as it simply does not exist: What is a representative basket of goods and services to measure inflation?
For someone who seldom or never flies, airline tickes and hotel costs are irrelevant. For those that do not eat out much, restuarant costs do not matter nearly as much as food from grocery stores. For someone that owns their own home for the past 5 years and has not taken cash out refis, their mortgage payment is the same (or less!! if they did a refi without taking out cash) than it was 5 years ago. Have heating bills and insurance and property taxes gone up? Yes, most likely. Food? Most likely but not by a lot IMO. I still buy chicken and turkey and pork chops on sale for about what I paid 5 years ago. I do think fresh vegetables are generally higher. That said, one can eat well for really cheap. Spagetti, pork chops on sale for $1.49, chicken legs on sale for .49, butt hams on sale for .99, potatoes 10 lb bag on sale for $1.49, canned beer and pop on sale cost no more than 5 years ago, prime rib on sale for $4.99 is about the same as 5 years ago. I buy cheese on sale when they are 2 for 1, and the same for tuna and canned salmon. One really can eat very well for cheap, but perhaps it is harder if one likes a lot of fresh fruit and vegetables, especially out of season. Lettuce is about .99 a head now and perhaps it was .79 5 years ago, I do not remember.
But..... If you buy chops when thay are not on sale you pay $5.49, $9.99 for prime rib, $4.49 or more for potatoes, $1.29 for chicken legs. How does one measure inflation in that?
To an extent it makes sense for the govt to substitute chicken for pork chops when chops are hign and chicken low (as long as pork is ocassionaly low for someone to stock up). Those that do not know how to shop can get taken to the cleaners.
Anyway, back to that basket of goods. Someone renting does not care about property taxes and neither does someone living for a long time in a state where rates are capped. Someone renting generally does not care about heat either.
Is there such a thing as a representative basket? What about stock prices? What about the "game freak" and the person that never plays them? I have asked this a zillion times but do we want the FED basing interest rate policy when oi rises because of peak oil?
All of this nonsense can be stopped in a flash if governemnts did not crank out money hand over fist. Rising productivity would actually cause a drop in most goods and services over time and that would be a good thing as opposed to being something to fear.
It is a joke for the FED to act as if they are "inflation fighters" when they are actually currency cranks. True inflation can not be measured by the CPI, there is no representative basket and even if there was a representative basket, targeting proices when the problem is over expansion of credit is a mistake that will keep getting compounded up until the next credit implosion.
Mish |
