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To: Oblomov who wrote (12091)	8/18/2000 11:16:37 AM
From: pater tenebrarum	Read Replies (4) \| Respond to of 436258

unfortunately no-one knows how high inflation really is. OFFICIAL headline inflation (the one including things that go up in price) is running between 3-4% already. my off the cuff guess is it's understated by at least 50%, i.e. it's really running in the region of 5-6%, perhaps higher. if one looks at the BLS data in detail, their view on energy and housing specifically sounds like a fairy tale. the numbers look to have been invented by them...they certainly don't reflect reality (in housing, they contradict the reports on soaring house prices and rents published by real estate associations, in energy, well, look at a futures chart, check by how much it has gone up, and look by how much they say it has gone up. there isn't even a loose relationship...they just seem to make things up as they go along). similarly the wild rises in electricity prices, medical insurance, drugs, are not reflected in official numbers. to my utter amazement not even one mainstream economist seems to question this obvious nonsense. anyway, if one looks at CRB components, ag commodities have actually collapsed completely. what has been strong were the PGMs, energy, meat and sugar. so half of the CRB is soaring at extremely inflationary rates, while the other half is still amidst a deflationary collapse. my guess is that the next thing to happen will be a run in the base metals, an oversold bounce in ag commodities, and a further retreat of meat prices. energy will depend on the severity of this winter. if it's a mild winter, i'm looking for a pullback. if the winter is very cold, heating oil prices will explode due to massive shortages. btw, the characterization of energy prices as 'volatile' over the past 1 1/2 years is misleading. they haven't been volatile, they have simply been going up, in an almost straight line. it's the legacy of Arthur Burns, taking out whatever goes up in price from price indices and calling it 'volatile'. this methodology is what has led to the massive inflation of the '70's. people may not think about it much, but energy is THE major input cost for the economy. its effects will eventually percolate through the price structure - alternatively corporate margins will come under severe pressure.