The Definitive Inflation vs Deflation Debate and What to do About It Thread

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  • Tue, Mar 13, 2012 - 03:18pm

    #201

    JAG

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    Bernanke Dart Board

ao wrote:

I’m assuming you’re selling something like Ben Bernanke dart boards… 

How did you know? It’s our best selling product. We’ve trippled the price in the last 3 years and it keeps on selling.

Actually, we have very few business expenses as we moved to digital patient records a few years ago.

Best…Jeff

  • Tue, Mar 13, 2012 - 05:17pm

    #202
    ao

    ao

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    JAG wrote:ao wrote: I’m

JAG wrote:
ao wrote:

I’m assuming you’re selling something like Ben Bernanke dart boards… 

How did you know? It’s our best selling product. We’ve trippled the price in the last 3 years and it keeps on selling.

Actually, we have very few business expenses as we moved to digital patient records a few years ago.

Best…Jeff

Nice!  Where can I buy a gross?

I went to digital patient records back in the 90s but there are still plenty of expenses. 

 

  • Tue, Mar 13, 2012 - 05:58pm

    #203

    rhare

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    Not sure those are good indicators…

Jeff, I’m not sure these are good inflation indicators, at least not in the short term (less than a decade):

Jeff wrote:
  • Also electricity has gotten cheeper for me each year over the last 4 years. In 2008, I paid $0.167/kwh for electricity, today I pay $0.103/kwh, a 38.3% drop in price.
  • The same goes for natural gas. I paid $622.71 total for natural gas in ’08, $416.12 total in ’09, $387.02 total in ’10, and $313.24 total in ’11. That is a 49.7% drop in 4 years.
  • My property taxes were $5710 in 2008, $5138 in ’09, $4570 in ’10, $4704 in ’11, for a 17.6% drop over 4 years.
  • Income taxes have gone up, but I had more income.
  • Car registration and inspection fees have gone up, but we are only talking about $10.

Electricity here has gone up 5-10%/kWh over the last 3 years.  However, this is often a highy manipulated number due to PRC (public regulatory commisions) which control the price of regulated monopolies.  Here the PRC kept prices artificially low for several years which nearly bankrupted the utility and resulted in the utility not spending on maintenance.  Now it’s catch up time.  Over say a decade I would think you could get and accurate picture of real price, but short term it’s a tough indicator.

Natural gas is also a tough measure.  You can’t really use total price over a year since it can vary dramatically if your using it for heat depending on the weather.  Also, worse weather means higher prices / therm.  You really have to look at average price/therm over about a year to get an idea of where prices are heading.  In addition due to the “bubble” type rush into shale gas it has resulted in a short term glut depressing prices.  I suspect as we see investors stop flushing money down the drain in these shale gas plays, that prices will rise to match true costs of drilling.

Wow – your property taxes are going lower!  In my area property taxes have risen every year.  As states and municipalities become desperate for revenue I suspect property owners will be the cash cow.

Income taxes aren’t a really good indicator either since they are primarily a federal government issue and we all know how much of the governments spending is borrowed.  How would your taxes be doing if government actually taxed you at the rate it spends?

Car registrations – We haven’t seen much of an increase either, in our state it’s such a small revenue source compared to others that I suspect the state just hasn’t bothered.

I think it’s really tough to measure inflation on an individual basis over short durations because small changes in demand can dramatically impact prices.  It’s also tough to spot it in everyday small purchases, since how many of us would really notice even a 5% change over the course of a year in a $10 product.  A change of $0.50 in a $10 item is pretty unnoticable unless you are buying large quantities or buying on regular intervals.

 

  • Tue, Mar 13, 2012 - 06:58pm

    #204

    JAG

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    rhare wrote:I think it’s

rhare wrote:

I think it’s really tough to measure inflation on an individual basis over short durations because small changes in demand can dramatically impact prices.  It’s also tough to spot it in everyday small purchases, since how many of us would really notice even a 5% change over the course of a year in a $10 product.  A change of $0.50 in a $10 item is pretty unnoticable unless you are buying large quantities or buying on regular intervals.

Actually, with an iPhone app, it’s quite easy to track exact prices over time, and between stores. I’ve used several different apps over the years, but the one I use now is PriceMouse.

Also, when it comes to inflation, the only thing that matters to me is how much I pay for the things that I use everyday. 

Best…Jeff

  • Wed, Mar 14, 2012 - 02:52am

    #205
    Denny Johnson

    Denny Johnson

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    JAG wrote: My dollar

JAG wrote:
  • My dollar buys more groceries than it did in 2008.

Jeff…….by your own admission, you have adopted the tortured BLSBS  substitution adjustments for your personal CPI. Your basket of goods has changed.

 JAG wrote:

 

Every year at Christmas I like to treat myself to a bag of pistachios. In 2008 and 2009, that bag cost $13, this year it costs $19. Now obviously there are many factors contributing to that 46% price hike in Pistachios. But if I see concurrent price hikes in many other products at the local big box retailer (which I do), its hard for me not to conclude that prices are rising because of easy-credit induced speculation in the commodity markets. But is this broad increase in prices correctly identified as monetary inflation? Are my dollars buying less? In my personal opinion the answer is a qualified no.

The “inflation” that we are witnessing today is just a market phenomenon, and I’m not buying it or Pistachios. I will hoard what “worthless” dollars I have, and wait for a better deal on those items that I don’t consider essential. Markets are cyclical, and just as I wouldn’t buy into the stock and commodity markets at these prices, I won’t buy into the consumer markets either. One day, all these “worthless” dollars that I’m hoarding will buy much more in the markets that they do today, at which point I will stock-up on the non-perishable essentials again, and treat myself to pistachios.

 

Best wishes………..Denny

  • Wed, Mar 14, 2012 - 04:04am

    #206
    Denny Johnson

    Denny Johnson

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    Deflation is the outcome of

Deflation is the outcome of a policy choice, nothing more, in an independent fiat currency regime.
 

Jesse

  • Wed, Mar 14, 2012 - 04:24am

    #207

    JAG

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    LOL Denny,I’ll bet you had

LOL Denny,

I’ll bet you had fun looking that one up.

I’m glad you brought up those pistachios, because that same 24 oz bag that cost $19 in 2009, is $14.98 at Sam’s Club today

What about your organic milk, how much more do you get for it now than you did 2008?

Jeff

 

 

  • Wed, Mar 14, 2012 - 06:05am

    #208

    rhare

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    Tough to discern inflation over short time frames.

Denny Johnson wrote:

Jeff…….by your own admission, you have adopted the tortured BLSBS  substitution adjustments for your personal CPI. Your basket of goods has changed.

I have noticed quite a few product changes.  The dog treats we used to get were packed into a box so tight it was hard to get them out, a couple of years ago that suddenly changed.  Same box, but I think they cut about 20% out.  I noticed the multivitamins I buy suddenly dropped in price about 30%. and the label changed.  Sure enough, comparing labels, same number of capsule but the daily % of many of the items dropped.  Also, recently the laundry soap used to do 110 loads, now 100 for the same low low price.

JAG, my point wasn’t that you can’t track the prices, it’s that unless you look at many many products it’s very hard to discover what is the true price change on an individual basis.  You really have to look at prices as a whole over a farily long time frame.  Supply/demand fluctuations, substitutions, quality changes, etc, all can mask longer term trends.  Just look at fuel?  Can you really tell if inflation or deflation have occured in the last few years?  Over a longer time say 20 years it becomes readily apparent.

While I think you could be right over the short term with saving your dollars, over the longer term (baring a sudden currency crisis) all you have to do is look at the trends and clearly inflation is occuring.  The only question is will deflationary forces temporarily outrun the inflation by the central banks and will you be able to time your buying of those items you want before a full blown currency crisis?  I’d rather risk paying slightly too much for items I want that are readily available now, than wait for better prices and risk not being able to aquire them at all.

 

 

  • Wed, Mar 14, 2012 - 02:44pm

    #209
    metametal

    metametal

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    Denny Johnson

Denny Johnson wrote:

Deflation is the outcome of a policy choice, nothing more, in an independent fiat currency regime.
 

Jesse

Then why has Japan made this choice and failed to reverse it?

  • Wed, Mar 14, 2012 - 05:26pm

    #210
    ao

    ao

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    pistachios + salt

JAG wrote:

LOL Denny,

I’ll bet you had fun looking that one up.

I’m glad you brought up those pistachios, because that same 24 oz bag that cost $19 in 2009, is $14.98 at Sam’s Club today

What about your organic milk, how much more do you get for it now than you did 2008?

Jeff

 

 

Sounds like they’re adding a lot of salt to up the package weight.

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