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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (56282)	3/20/2006 4:44:43 PM
From: TimbaBear	Read Replies (2) \| Respond to of 110194

Mish 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. You may choose to believe that real inflation exists only for those whose spending habits you can scoff at, but that doesn't make it so. Denigrating the lifestyles of those whose inflation experience is different than yours may have some kind of personal reward for you, but it is akin to someone holding their fingers in their ears and loudly singing: "LA LA LA LA" when something they don't want to hear is being said.....it may be effective in keeping one from hearing the unpleasant news, but it does not make the news any less real. Inflation is about measuring the difference in prices from one period to another, be those differences the result of monetary policy or some other forces. 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? Why not use the same basket of goods as was used in the 1940s, 1950s and 1960s? Isn't it really about comparing the prices for the same goods over time? Screw hedonic adjustments, let's just have a basket who contents can be compared across periods while keeping the value of the currency also at a constant. 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? Representative basket.....define "representative".....if your definition and mine differ, does that mean there can be no common ground and thus no determination of the direction of price movement? If rising energy prices cause a sustained rise on the overall costs of goods and services, and if the Fed's mission is to contain price increases to a certain range, then it would appear that they would have to account for the price increases in their planning. Timba