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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Joe NYC who wrote (112523)	5/24/2000 8:47:00 PM
From: TGPTNDR	Read Replies (2) \| Respond to of 1570293

Joe, OT AG Re: <your point that 30% of the total CPI is raw material cost of Oil and Gas must be wrong.> Came directly from a discussion on components of the cpi at stls.frb.org stats.bls.gov stats.bls.gov This is the 'raw material cost of finished goods', including heating, transportation, and what would normally be considered 'raw material, such as feedstocks to chemicals. In point of fact, the CPI rate on increase, for the last 1.3 years has been 1.95236%/year with energy excluded. See: stls.frb.org 2000.04 177.8 -1999.01 173.3 Diff 4.5/173.3 = 0.02596... 0.02596.../1.33 = 0.019518... or about 1.9% Note, this is w/o energy, not without Oil/Gas, as 'feedstocks' are not energy. Did I make any errors? Re: <The US CPI has been the highest in the industrial world for some time. The rest of the world uses oil as well.> The CPI level is not an issue. the delta in the CPI is the issue. Currently under 3%/year with massive energy increases included. AG shouldn't be 'Pumping money' either, but the trend, in peace time, in for deflation, not inflation. Money supply, IMO, should trail the GDP. I didn't post the message about cartels, that came from Scumbria. I was directly answering your question, as best I could. I agree, however, that cartels, generally, succeed only in the short term ( < 100 years or so, like DeBeers ). Re: <What I asked you in my post was how much of the prosperity would have been lost if the inflation rate was much higher than it is now.> Sorry, that's not how I took it. What I was saying was that AG fought major wars, PAST THE DEATH with inflation. His history is that he just keeps going 'till there is a major problem, then he RESCUES the world by backing off and pumping money. the hand on the money pump should be of far firmer material than his, IMO. I also don't like inflation. I far favor, as opposed to jacking interest rates up and down for a year or so a sudden shock. A 'sudden shock' of 1/2% would have stopped the Naz. bubble last Aug., IMO, without the collateral damage that I fear the feds actions in the near future will precipitate. I also think the last 1/2 point was too much, way too late. It REALLY pissed me off when AG said he wanted 'slow steady inflation'. Inflation, in any amount, IMO, causes damage. Low inflation causes little damage. big inflation causes big damage. Deflation can cause big damage. I am more afraid of Deflation right now than inflation(but I could certainly be wrong in that point). tgptndr

To: Joe NYC who wrote (112523)	5/25/2000 10:04:00 AM
From: pgerassi	Read Replies (1) \| Respond to of 1570293

Dear Jozef and Tgptndr: OT CPI over estimates inflation because it does not take into account buying habit changes over time. As certain items in the "Basket" become too high or cheaper alternatives become available, the basket should change to reflect this. This is normal over the greater than 10 year timescales. If the old freon was in the basket, paying 10 times more because it is being phased out would skew the CPI much to the high side. This happens for many of those things in the current basket. Thus, the current CPI is greater than it should be. Many economists estimate that it overstates by as much as 10-20%. The "Real" CPI is probably half of the printed CPI. The US probably has a "Real" CPI of between 0.5% to 1.5%. I believe that in Europe, their CPI does not include their "VAT", value added tax (national sales tax), thus their CPI actually understates their "Real" CPI. Pete