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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host
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To: J-L-S who wrote (22175)7/1/2006 11:36:31 PM
From: David Bogdanoff  Read Replies (1) of 42834
 
When you pay more for the same amount of energy and are left with less to buy your other needs(assumming their price stays the same)you end up buying less with your monthly paycheck(also assummed the same). You have now experienced inflation(admittedly a simple view), not an inflationary pressure.

I don not assert that prices of computers have to go down to counterbalance the rising costs in other parts of the economy. I agree that the measurement of inflation is more complex that listed retail prices. That is what makes it possible to arrive at an unrealistic inflation rate; there is just alot of subjectivity in assigning a value to a faster computer chip. My point is that the better computers now available to the consumer (better by many measurements) do not compensate for higher costs in other sectors.
The treatment of rents and housing prices in the CPI is very technical and has changed over the years. I think most people would see rising house prices as inflationary, regardless of how it is included in the CPI. I recall listening a discussion on a financial program as to why rising home prices actually decrease the calculated inflation.
This is why I don't agree with the official CPI figures.
Rising home prices in the San francisco bay area are not just inflationary; they are socially destructive. The younger generation typically cannot afford to buy even a starter home and are obliged to leave the area to start their adult work life. Recent newspaper article point out how the middle
class population is shrinking. Of course some people benefit from this inflation. So What? That doesn't mean it isn't inflation.
Just for you information, I lived for years in Brazil and experienced annual inflation above 20% during that time.
The Brazilians have a far better understanding of inflation and policies to live with it than most Americans. Please don't adopt a patronizing tone with me on the subject.
Bogtalk
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