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And the theory that "SUBSTIUTION" needs to be taken into acount when computing CPI is a perfect example of how state economists are moving the goalposts to obfucate the truth.
If steak cost X dollars one week, and it cost $X + Y dollars the next week, claiming that substiuting hamburger for steak means there was NO PRICE RISE is intellectual hooey!
Pretending that fuel prices are somehow not part of the cost of living, or that those rising prices are captured in everything else is another example of the flim-flammery of our reporting agencies.
I don't think it's intellectual hooey at all. The CPI is meant to measure an average basket of goods that a consumer might actually buy. Wen people substituted out of Compact Discs into less-expensive MP3's, or when people substitute out of old and expensive computer memory and into less expensive more modern memory, why shouldn't the CPI reflect that?
I don't think it's intellectual hooey at all. The CPI is meant to measure an average basket of goods that a consumer might actually buy. Wen people substituted out of Compact Discs into less-expensive MP3's, or when people substitute out of old and expensive computer memory and into less expensive more modern memory, why shouldn't the CPI reflect that?
Is steak the sname thing as hamburger?
No?
Then substitution in that kind of decision is sheer nonsense.
The issue of computer chips is entirely another kind of issue-- one where consumers aren't really substituting, the market is simply changing the product disign.
The CPI sustiution system for computing the CPI is economic bullshit by DESIGN.
I don't understand what the problem is. The CPI is supposed to measure a price index for goods people actually buy. If a relative price change occurs which makes steak more expensive, and people stop buying steak and switch to hamburgers, we should be measuring the price of hamburgers now because that's what people are buying.
The CPI isn't an index of the standard of living. It's an index of the price of goods consumers buy.
Is steak the sname thing as hamburger?
No?
Then substitution in that kind of decision is sheer nonsense.
The issue of computer chips is entirely another kind of issue-- one where consumers aren't really substituting, the market is simply changing the product disign.
The CPI sustiution system for computing the CPI is economic bullshit by DESIGN.
I don't understand what the problem is. The CPI is supposed to measure a price index for goods people actually buy. If a relative price change occurs which makes steak more expensive, and people stop buying steak and switch to hamburgers, we should be measuring the price of hamburgers now because that's what people are buying.
The CPI isn't an index of the standard of living. It's an index of the price of goods consumers buy.
If prices are forcing consumers to switch to different products, then it's disingenuous to say it's only being used to measure the price of goods people actually buy, because at that point the reason for consumers switching products is not by choice but by consequence. If what consumers WANTED to buy is now priced too high, and they switch to another product they wanted less, why should we not consider that price inflation as a negative causality of the substitution, and consider the effects of it?
Maybe it doesn't bother you, but it bothers me when I'm priced out of a market or even a specific good. If I can't buy what I usually like to buy anymore, I want that reflected in an inflation index so I can see how my government's monetary policy is affecting me.
I don't understand what the problem is. The CPI is supposed to measure a price index for goods people actually buy. If a relative price change occurs which makes steak more expensive, and people stop buying steak and switch to hamburgers, we should be measuring the price of hamburgers now because that's what people are buying.
The CPI isn't an index of the standard of living. It's an index of the price of goods consumers buy.
If prices are forcing consumers to switch to different products, then it's disingenuous to say it's only being used to measure the price of goods people actually buy, because at that point the reason for consumers switching products is not by choice but by consequence. If what consumers WANTED to buy is now priced too high, and they switch to another product they wanted less, why should we not consider that price inflation as a negative causality of the substitution, and consider the effects of it?
Maybe it doesn't bother you, but it bothers me when I'm priced out of a market or even a specific good. If I can't buy what I usually like to buy anymore, I want that reflected in an inflation index so I can see how my government's monetary policy is affecting me.
But it's not inflation. It's a change in relative prices.
It's a moot point anyway, because the headline CPI doesn't substitute across goods in the basket. This is another of those claims like "it leaves out food, energy and housing" that's just plain untrue. The fact that there isn't substitution across goods is a criticism of the CPI, and I think other indices may do that (I think chained CPI does?).
If prices are forcing consumers to switch to different products, then it's disingenuous to say it's only being used to measure the price of goods people actually buy, because at that point the reason for consumers switching products is not by choice but by consequence. If what consumers WANTED to buy is now priced too high, and they switch to another product they wanted less, why should we not consider that price inflation as a negative causality of the substitution, and consider the effects of it?
Maybe it doesn't bother you, but it bothers me when I'm priced out of a market or even a specific good. If I can't buy what I usually like to buy anymore, I want that reflected in an inflation index so I can see how my government's monetary policy is affecting me.
But it's not inflation. It's a change in relative prices.
It's a moot point anyway, because the headline CPI doesn't substitute across goods in the basket. This is another of those claims like "it leaves out food, energy and housing" that's just plain untrue. The fact that there isn't substitution across goods is a criticism of the CPI, and I think other indices may do that (I think chained CPI does?).
I own a painting business. Last year, prices for paint nationwide had 4 price increases, and already one so far this year. The reason being, is that a raw material called titanium dioxide which is used to make most paints, is seeing dramatic price increases. My total paint costs last year went up at least 25%. I was paying $22/gal for my preferred line of interior flat finish paint, and now I'm paying $28. All in only one year. So now on smaller jobs where my profit margin is lower and I can't justify passing too much of the cost burden on to my customers for fear of potentially losing the bid, I go with a less expensive line of paint to cover the difference.
I'm not supposed to see inflation there and be upset about it because I can always buy a cheaper paint?
But it's not inflation. It's a change in relative prices.
It's a moot point anyway, because the headline CPI doesn't substitute across goods in the basket. This is another of those claims like "it leaves out food, energy and housing" that's just plain untrue. The fact that there isn't substitution across goods is a criticism of the CPI, and I think other indices may do that (I think chained CPI does?).
I own a painting business. Last year, prices for paint nationwide had 4 price increases, and already one so far this year. The reason being, is that a raw material called titanium dioxide which is used to make most paints, is seeing dramatic price increases. My total paint costs last year went up at least 25%. I was paying $22/gal for my preferred line of interior flat finish paint, and now I'm paying $28. All in only one year. So now on smaller jobs where my profit margin is lower and I can't justify passing too much of the cost burden on to my customers for fear of potentially losing the bid, I go with a less expensive line of paint to cover the difference.
I'm not supposed to see inflation there and be upset about it because I can always buy a cheaper paint?
It's not inflation. Oh my god, it's not inflation. Inflation doesn't mean "the price of something goes up". The definition of inflation is an increase in the general level of prices. If there's a shock to the price of oil, or food, or titanium dioxide, or iron ore, that's not inflation. That's a relative price change.
I own a painting business. Last year, prices for paint nationwide had 4 price increases, and already one so far this year. The reason being, is that a raw material called titanium dioxide which is used to make most paints, is seeing dramatic price increases. My total paint costs last year went up at least 25%. I was paying $22/gal for my preferred line of interior flat finish paint, and now I'm paying $28. All in only one year. So now on smaller jobs where my profit margin is lower and I can't justify passing too much of the cost burden on to my customers for fear of potentially losing the bid, I go with a less expensive line of paint to cover the difference.
I'm not supposed to see inflation there and be upset about it because I can always buy a cheaper paint?
It's not inflation. Oh my god, it's not inflation. Inflation doesn't mean "the price of something goes up". The definition of inflation is an increase in the general level of prices. If there's a shock to the price of oil, or food, or titanium dioxide, or iron ore, that's not inflation. That's a relative price change.
Bullshit. The rise in raw materials costs shocks the entire trade industry, from painters to builders. The rise in oil prices shocks the entire WORLD because the cost of energy goes up, increasing costs of doing business, which increases costs to consumers.
You live in a fucking fantasy world where book definitions, and statistical letter representations, and little phrases somehow make or break your entire economic viewpoint.
If my entire livelihood is more expensive, from business cost to personal consumption cost, that's inflation. Everything I do, from running my business, to gassing my vehicle, to heating my home, to putting food on my table, is costing myself and everyone else in this country MORE.
I call a spade a spade. You can have your textbooks.
If a higher price causes me to be priced out of a product, that's inflation to me.
I own a painting business. Last year, prices for paint nationwide had 4 price increases, and already one so far this year. The reason being, is that a raw material called titanium dioxide which is used to make most paints, is seeing dramatic price increases. My total paint costs last year went up at least 25%. I was paying $22/gal for my preferred line of interior flat finish paint, and now I'm paying $28. All in only one year. So now on smaller jobs where my profit margin is lower and I can't justify passing too much of the cost burden on to my customers for fear of potentially losing the bid, I go with a less expensive line of paint to cover the difference.
I'm not supposed to see inflation there and be upset about it because I can always buy a cheaper paint?
It's not inflation. Oh my god, it's not inflation. Inflation doesn't mean "the price of something goes up". The definition of inflation is an increase in the general level of prices. If there's a shock to the price of oil, or food, or titanium dioxide, or iron ore, that's not inflation. That's a relative price change.
Bullshit. The rise in raw materials costs shocks the entire trade industry, from painters to builders. The rise in oil prices shocks the entire WORLD because the cost of energy goes up, increasing costs of doing business, which increases costs to consumers.
Core inflation is a measure of inflation, which excludes certain items that face volatile price movements, notably food and energy.
The preferred measure by the Federal Reserve of core inflation in the United States is the core Personal consumption expenditures price index (PCE). This is based on chained dollars...
The CPI is still used for many purposes, for example, for indexing social security [and] by central banks of other countries when measuring inflation. The CPI is presented monthly in the US by the Bureau of Labor Statistics. This index tends to change more on a month to month basis than does "core inflation". This is because core inflation eliminates products that can have temporary price shocks (i.e. energy, food products). Core inflation is thus intended to be an indicator and predictor of underlying long-term inflation.
Core inflation - Wikipedia, the free encyclopedia
Core inflation is a measure of inflation, which excludes certain items that face volatile price movements, notably food and energy.
The preferred measure by the Federal Reserve of core inflation in the United States is the core Personal consumption expenditures price index (PCE). This is based on chained dollars...
The CPI is still used for many purposes, for example, for indexing social security [and] by central banks of other countries when measuring inflation. The CPI is presented monthly in the US by the Bureau of Labor Statistics. This index tends to change more on a month to month basis than does "core inflation". This is because core inflation eliminates products that can have temporary price shocks (i.e. energy, food products). Core inflation is thus intended to be an indicator and predictor of underlying long-term inflation.
It's not inflation. Oh my god, it's not inflation. Inflation doesn't mean "the price of something goes up". The definition of inflation is an increase in the general level of prices. If there's a shock to the price of oil, or food, or titanium dioxide, or iron ore, that's not inflation. That's a relative price change.
Bullshit. The rise in raw materials costs shocks the entire trade industry, from painters to builders. The rise in oil prices shocks the entire WORLD because the cost of energy goes up, increasing costs of doing business, which increases costs to consumers.
You live in a fucking fantasy world where book definitions, and statistical letter representations, and little phrases somehow make or break your entire economic viewpoint.
If my entire livelihood is more expensive, from business cost to personal consumption cost, that's inflation. Everything I do, from running my business, to gassing my vehicle, to heating my home, to putting food on my table, is costing myself and everyone else in this country MORE.
I call a spade a spade. You can have your textbooks.
You need to pull your fucking head out of your arse. Drop this humpty dumpty bullshit where a word is whatever you intend it to mean. "Inflation" is an idea with a very specific definition and implication. "To me inflation means that my prices are going up". You don't get to take words and redefine them so that they centre around you and then complain that measurements of that concept don't fit with your personal definition, you fucking narcissist. I will keep my books, thank you. How about you take the time to fucking read one.
Inflation and credit expansion, the preferred methods of present day government openhandedness, do not add anything to the amount of resources available. They make some people more prosperous, but only to the extent that they make others poorer.
You're fighting over the symptom of the disease or the disease as the symptom. Inflation is that type of devil. It is easy to hide its true affect and meaning on economics because it is both. It is a raise the credit and supply of money and that translates into a weakened currency and therefore, higher prices. Only in command areas of sector can it be controlled, and or, exacerbated in that regard.
As it stands:
Inflation and credit expansion, the preferred methods of present day government openhandedness, do not add anything to the amount of resources available. They make some people more prosperous, but only to the extent that they make others poorer.
Well, if you know Austrian school economics you should know that economics is not a hard science like physics. It is a social science in the vein of human action and as such, can not be quantified with the same tools used in natural sciences.
