Is reported USA inflation correct or not?

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RayTomes's picture
RayTomes
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Joined: May 20 2009
Posts: 67
Is reported USA inflation correct or not?

Reference is made to an alternate more correct CPI measure. The official CPI has been departing from this by 8% per annum in recent years and began departing back in the early 1980s. If these statements were correct, then CPI is now really 2.66 times higher than the reported statistics. I previously mentioned that if this were true, then house prices divided by CPI was not actually at a very high level of 200% normal in recent years.

I decided to do some independent research on this as it is a very important social issue. I used the prices of a whole variety of individual food items reported in many different countries for many years from the 1980s. For the USA I found 24 items that had prices in 1985 and 2001 (the data dates from 2002). These 24 items went up in price by amounts ranging from -6% to 156% with an average of 52.3% over the 16 years. That represents an average inflation rate of 2.66% per annum, which is entirely consistent with the official statistics. I made no attempt at weighting the items, just averaged them.

When individual series are used like this then the criticisms of the standard method of substituting cheaper items when something goes up does not apply. I suspect that the information at http://www.shadowstats.com is a complete fabrication.

rhare's picture
rhare
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Posts: 1325
Re: Is reported USA inflation correct or not?

Do you have a link to your research?  It would be nice to see your data.  Did you look at anything other than food?

-- Rob

RayTomes's picture
RayTomes
Status: Bronze Member (Offline)
Joined: May 20 2009
Posts: 67
Re: Is reported USA inflation correct or not?
rhare wrote:

Do you have a link to your research?  It would be nice to see your data.  Did you look at anything other than food?

-- Rob

Hi Rob

When I check back on it I find that it was all food. Sorry, I should have mentioned that.

I have not loaded the analysis anywhere. The source of the data which I got in about 2003 is http://www.economicswebinstitute.org/main.htm and it seems that the data is now updated to 2009. It is a huge spreadsheet with about a hundred countries and 30 items for each for a period of 17 years. Some items are missing in the most recent year so that I could not use them all.

When I looked at other commodities for industrial input, source is FRED series PPIIDC.csv then I get these index values 1985/01=103.4, 2001-01=142.9, 2009/01=172.3 so over the period 1985 to 2001 the average inflation is 2.04% and over the period 1985 to 2009 it is 2.15%. But of course these might be considered contaminated by shadowstats.

Regards

Ray

 

SagerXX's picture
SagerXX
Status: Diamond Member (Online)
Joined: Feb 11 2009
Posts: 2237
Re: Is reported USA inflation correct or not?

 Hasn't the US gov backed out food & energy from the "Ofishul" inflation rate?  Only the two items most subject to runaway cost increases the last coupla years...

Sunburned today, but still VIVA! -- Sager

Davos's picture
Davos
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Joined: Sep 17 2008
Posts: 3620
Re: Is reported USA inflation correct or not?

 Hello Ray

I did The same exercise - save for  the years. I compared my purchases  to gold.

In 2002 I think an ounce set one back $250.00  

So I Looked at my receipts for gas, lumber  and food and one or ten other items.

In the summer of 2008 I said okay  if that one ounce of bullion was Sold for dollars $980 (think that  was going price) Then I could purchase this much of  the items that I could purchase in 2002 with  $250.00 cash.

Then I calculated what I could purchase (in 2008) if that cash wasn't converted to bullion in 2002.

Sometimes I regret not going to college  for economics, it is facinating, and other times  I think if I Did I'D think like an  economist.

In any event this is my take:  Jim Puplaua is correct, inflation has NOTHING  to do with the cost of stuff. inflation only  applies to how much money is in the System.  System equates to  FED. BANKS, credit cards and  most of all SHADOW BANK $ .

 For anyone wanting to read about shadow banking please goggle Pimco and Minsky.

 As Jim Pupluva says - inflate the monetary supply  and the purchasing power decreases.

Now (as in TODAY) one can protect themselves  by converting paper to bullion. All paper will be  destroyed, and I didn't say that - It is Minsky's   Ponzi, Law of economics.

I'd be interested to hear what you find if you  take a second and do this calculation.

 I concluded that we are already in a period of  currency destruction or paper destruction and  I also became aware that I am not in agreement  with what many economist learn in school.

Ps Also, try dividing asset  quantity by asset quantity.  I noticed that CM said in the 1800, they could  put money in a jar and 50 years later take it out  and buy the same stuff they could 50 years  earlier. I now look at bullion as a "jar': 

PS from my notes and this is wriiten in the am, I made the above post last night before turning in on the tablet pc. (Sorry for the wrtiting, writing on the tablet is messy)

2002: $310 (gold) / 1.38 (Gas) = 224 gallons 

2008: $920 (gold) /  4.00 (Gas)= 230 gallons

2008  $310 (cash) / 4.00 (Gas)=   78 gallons 300% less

And I know what a lot of readers are going to say to the methodology uses here, but I'd argue ANY economist on this and I'd also harp on the fact that I can't take food and energy out of my budget like Nixon was able to do - well until he left office anyway.

In closing, I think it is Patrick who says, gold is money in his signature. I'd suggest that there is no inflation - if you use Patrick's currency.

Thomas Hedin's picture
Thomas Hedin
Status: Platinum Member (Offline)
Joined: Jan 28 2009
Posts: 815
Re: Is reported USA inflation correct or not?

The two videos list here show what is causing our 'price inflation' and gives an actual solution to it!

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