Inflation 101
Sorry to deviate from Man Week, but the guy who gave you the Ben Bernank is at it again... and it’s gold.
“What about inflation statistics other than food and gas? Are those going up?Somewhat, but they’re understating the truth.
Why?
They use virtual price decreases to offset real price increases.
What is a virtual price decrease?
According to economists, if a fancy Smartphone costs the same as it did last year but has more features, then its deflating.”
Haha. Classic.
Enjoy your weekend monkeys.
Here is a simpler explanation of inflation 101 from Ducktales, LMAO
Thanks!
"But what about people that cant afford a fancy phone? Those people are just screwed." lol
While likely taken out of context I cannot believe headofNYfed just utilized ipad 2 as evidence for inflation/deflation discussion. Some of the logic @ the end re: savings, and deposit rates is kind of convoluted tho
the iPad 2 comment is at about the 13 minute mark. Supposedly someone in the crowd quipped "I can't eat an iPad" which would be awesome.
At the 10 minute mark he starts talking about this "new tool" the Fed has to prevent banks from lending their excess reserves, they're going to pay interest on it. But won't that just increase ER more? I'm not quite sure I see how that's supposed to help.
http://www.youtube.com/embed/iDmJcDvaBGU
Even the ETrade baby is losing money ( Pre-'08 video)
Cool. I saw some financiers talking about inflation on TV, but I forgot they are all rich investors betting on stock increase. That's why all of them say it is not big problem for the economy. LOL
LOL that was funny as hell but sadly somewhat true.
The adjustments for quality are the most retarded thing ever and just goes to show that economics has officially lost all common sense.
The computer I used today is probably like what, 4x more powerful than the one I used 4 years ago. But does that mean that my productive output is 4x greater? Can I write emails 4x faster? Can I write documents 4x faster? Are my models in excel done 4x faster?
What lunacy...recently a report came out that said that by the old method, inflation is at about 10% right now. The Fed can't justify monetizing the debt if the government says inflation is 10%, so the numbers are cooked to allow the money printing policy to go through.
I think the idea is that you can buy the old products for less. You can buy a 4 year old computer today for way less than 4 years ago, so technology prices are deflating even if current computers cost the same as they did four years ago.
Btw, though everyone cites computers, the adjustment is done to EVERYTHING (houses and cars are a huge portion of the CPI).
There's also the substitution effect, which means that say the price of beef goes up, they just assume consumers buy more rice, which is cheap. While this is true to an extent, it's not really the right thing to do in my opinion because you can have the same GDP and a lower quality of life.
This is nothing new, here's a great article on the subject from the year 2000. http://www.larouchepub.com/other/2000/ref_quality_adj_2742.html
Betting on high inflation is necessary if the government is going to lie about inflation and use those lies to justify negative real rates on their debt (and thus misprice the entire dollar-denominated bond market).
For a good idea about the non governement doctored numbers on inflation and unemployment check out Shadow Stats: http://www.shadowstats.com/alternate_data/inflation-charts
I just paid $15 for a deluxe car wash and it didn't even get the bird shit off. That's when I learned about inflation.
Rising like a tide
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