Comments on: Is Inflation Worse Than We Think? http://allfinancialmatters.com/2008/04/14/is-inflation-worse-than-we-think/ A personal finance blog dedicated to discussing such topics as budgeting, asset allocation, 401K, IRA, cash flow, insurance, financial planning, portfolio management, and other areas in personal finance. Sat, 21 Nov 2009 13:00:57 -0800 http://wordpress.org/?v=abc hourly 1 By: AndyS http://allfinancialmatters.com/2008/04/14/is-inflation-worse-than-we-think/comment-page-1/#comment-294466 AndyS Wed, 23 Apr 2008 18:32:25 +0000 http://allfinancialmatters.com/2008/04/14/is-inflation-worse-than-we-think/#comment-294466 Oil is only one of the factors driving inflation. Currency and future expectations are other things. I do agree that the Fed's view of the CPI is limited. Food and Oil prices have only been going up, volatility implies up and down movement. Unfortunately it will be too political if the Fed says "Roger...I think we have a problem...". I wrote a post recently on my blog about the impact food prices are having on my grocery budget and I am sure like most American household I can attest to the reality of inflation. I read the Fortune article - it is thought provoking for sure. Andy. Oil is only one of the factors driving inflation. Currency and future expectations are other things. I do agree that the Fed’s view of the CPI is limited. Food and Oil prices have only been going up, volatility implies up and down movement. Unfortunately it will be too political if the Fed says “Roger…I think we have a problem…”.

I wrote a post recently on my blog about the impact food prices are having on my grocery budget and I am sure like most American household I can attest to the reality of inflation.

I read the Fortune article – it is thought provoking for sure.

Andy.

]]> By: James http://allfinancialmatters.com/2008/04/14/is-inflation-worse-than-we-think/comment-page-1/#comment-283669 James Mon, 14 Apr 2008 22:58:47 +0000 http://allfinancialmatters.com/2008/04/14/is-inflation-worse-than-we-think/#comment-283669 I thought the falling dollar was the result of inflation, not the cause. I thought the falling dollar was the result of inflation, not the cause.

]]> By: Bemert http://allfinancialmatters.com/2008/04/14/is-inflation-worse-than-we-think/comment-page-1/#comment-283623 Bemert Mon, 14 Apr 2008 21:40:26 +0000 http://allfinancialmatters.com/2008/04/14/is-inflation-worse-than-we-think/#comment-283623 By JLP -- \" My theory is that all of this inflation is being driven by one thing: The price of oil ! \" _______ Your theory is totally wrong. Price hikes are the \'result\' of inflation, not its \'cause\'. \"Inflation\" means increasing the quantity of money in circulation. More money around \'causes\' prices to be bid up for everything. Higher oil prices don\'t increase the quantity of money -- they merely cause oil buyers to have less money in their pockets... as it\'s transferred to oil sellers\' pockets. The overall quantity of money remains the same -- so there is no inflation at all from mere price increases. Without inflation or government interference, prices follow the economic law of supply & demand. Inflation is deliberate federal government policy; new money is produced in vast quantities from thin air by the U.S. Central Bank (Federal Reserve). That is the \'cause\' of the inflation we all see and feel. It is the only cause of inflation. Federal politicians inflate (debase) our currency so they can spend extravagantly, imposing this heavy hidden-tax on the rest of us. Note that state and local governments don\'t have the power to legally counterfeit money like the Fed\'s do -- so they are always having budget crises and shortfalls. Our President & Congressmen don\'t sweat about budget shortfalls -- the Federal Reserve produces all the new money they want. Where da ya think the Trillions of Dollars are coming from for the Wall Street bailouts and Iraq War ?? By JLP — \” My theory is that all of this inflation is being driven by one thing: The price of oil ! \”

_______

Your theory is totally wrong.

Price hikes are the \’result\’ of inflation, not its \’cause\’.

\”Inflation\” means increasing the quantity of money in circulation. More money around \’causes\’ prices to be bid up for everything.

Higher oil prices don\’t increase the quantity of money — they merely cause oil buyers to have less money in their pockets… as it\’s transferred to oil sellers\’ pockets. The overall quantity of money remains the same — so there is no inflation at all from mere price increases. Without inflation or government interference, prices follow the economic law of supply & demand.

Inflation is deliberate federal government policy; new money is produced in vast quantities from thin air by the U.S. Central Bank (Federal Reserve). That is the \’cause\’ of the inflation we all see and feel. It is the only cause of inflation.

Federal politicians inflate (debase) our currency so they can spend extravagantly, imposing this heavy hidden-tax on the rest of us.

Note that state and local governments don\’t have the power to legally counterfeit money like the Fed\’s do — so they are always having budget crises and shortfalls. Our President & Congressmen don\’t sweat about budget shortfalls — the Federal Reserve produces all the new money they want. Where da ya think the Trillions of Dollars are coming from for the Wall Street bailouts and Iraq War ??

]]> By: Curt at PennyJobs.com http://allfinancialmatters.com/2008/04/14/is-inflation-worse-than-we-think/comment-page-1/#comment-283471 Curt at PennyJobs.com Mon, 14 Apr 2008 19:20:02 +0000 http://allfinancialmatters.com/2008/04/14/is-inflation-worse-than-we-think/#comment-283471 Oil and the falling dollar tied together. Oil and inflation will likely continue until the fed reverses course and starts protection the dollar by increasing interest rates. I don't think we can trust the CPI and that is a very big problem because inflation sneak up on us and before we know it we are looking at hyper-inflation. Nixon started wage and price controls in 1971 what inflation was only 4.9%. Today, depending on who you talk to, we have 8-12% inflation - far beyond the 4.9% the Nixon era. Therefore, because everyone is distracted with the CPI, we are on the very of double-digit inflation with hyper-inflation on deck if we don't change our monetary policy quickly. Oil and the falling dollar tied together. Oil and inflation will likely continue until the fed reverses course and starts protection the dollar by increasing interest rates.

I don’t think we can trust the CPI and that is a very big problem because inflation sneak up on us and before we know it we are looking at hyper-inflation. Nixon started wage and price controls in 1971 what inflation was only 4.9%. Today, depending on who you talk to, we have 8-12% inflation – far beyond the 4.9% the Nixon era. Therefore, because everyone is distracted with the CPI, we are on the very of double-digit inflation with hyper-inflation on deck if we don’t change our monetary policy quickly.

]]> By: Lord http://allfinancialmatters.com/2008/04/14/is-inflation-worse-than-we-think/comment-page-1/#comment-283341 Lord Mon, 14 Apr 2008 17:45:09 +0000 http://allfinancialmatters.com/2008/04/14/is-inflation-worse-than-we-think/#comment-283341 Oil and the falling dollar are responsible for most of the price increases. The dollar may not be that far from bottoming, but that may not be the case with oil. Oil and the falling dollar are responsible for most of the price increases. The dollar may not be that far from bottoming, but that may not be the case with oil.

]]> By: Ken http://allfinancialmatters.com/2008/04/14/is-inflation-worse-than-we-think/comment-page-1/#comment-283340 Ken Mon, 14 Apr 2008 17:44:29 +0000 http://allfinancialmatters.com/2008/04/14/is-inflation-worse-than-we-think/#comment-283340 I think the false inflation numbers are driven by entitlements. If the govt reports the true inflation then they are required to increase social security payments, etc.. I think the false inflation numbers are driven by entitlements. If the govt reports the true inflation then they are required to increase social security payments, etc..

]]> By: Mark http://allfinancialmatters.com/2008/04/14/is-inflation-worse-than-we-think/comment-page-1/#comment-283323 Mark Mon, 14 Apr 2008 17:31:40 +0000 http://allfinancialmatters.com/2008/04/14/is-inflation-worse-than-we-think/#comment-283323 How does this affect a company that uses the CPI as basis for their "cost of living" pay increases? Is there a better way to track the true "cost of living" for a region in the US? How does this affect a company that uses the CPI as basis for their “cost of living” pay increases? Is there a better way to track the true “cost of living” for a region in the US?

]]> By: Traciatim http://allfinancialmatters.com/2008/04/14/is-inflation-worse-than-we-think/comment-page-1/#comment-283254 Traciatim Mon, 14 Apr 2008 16:09:31 +0000 http://allfinancialmatters.com/2008/04/14/is-inflation-worse-than-we-think/#comment-283254 The core CPI removes volatile items, the CPI does not. What's the problem? The core CPI removes volatile items, the CPI does not. What’s the problem?

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