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Thread: US inflation

  1. #1
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    US inflation

    I was projecting our household operating requirements for the next six-months and, as usual, fuel prices have increased 20% over the last year, same as the prior year. Food/household expense was up 13% over the last year, utilities 8%. Normal entertainment costs, we usually take four meals out weekly, not fast food, stayed about the same for the past year but two good restaurant owners I know are preparing to raise menu prices 10-15% to offset supplier increases they've absorbed. This is about what I've experienced for the past year in this locale.

    I'm wondering how general society is faring with these cost of living increases. While government inflation numbers exclude energy and food, the majority of wage earners aren't experiencing income growth anywhere close to actual cost increases. Any comments? European or other comparisons?
    These are my principles. If you don't like them I have others. ~Groucho Marx~

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    Inflation in Holland is around 2% and unlike in the US this does include everything like food, fuel and insurance etc.
    Inflation in Europe is also around 2%.

    Inflation in the US is higher because of the relative weakness of the dollar against the Euro, so fuel and food costs (food has to travel an average of around 1000 to 1500 miles to reach the end consumer) are higher than in Europe.

    The Fed wants to make us believe that inflation in the US is also around 2% but they use the phony core CPI so basically that number is way off.
    A couple of people on the web have started a project to make their own CPI which does include everything like fuel and food. It'll be interesting to see what the real US inflation number is when they publish that CPI.
    Eh, what's this? A Republican from Texas that actually makes sense and can speak English?

    http://www.ronpaul2008.com/html/Issues_fx.html

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    Here's a good article that exposes the fraud of the core CPI and gives a glimpse at the real inflation rate in the US.
    The author does have a bit of a 'the sky is falling' writing style, but his numbers don't lie:

    http://www.financialsense.com/stormwatch/2005/0624.html
    Eh, what's this? A Republican from Texas that actually makes sense and can speak English?

    http://www.ronpaul2008.com/html/Issues_fx.html

  4. #4
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    Quote Originally Posted by gamehuis
    Inflation in Holland is around 2% and unlike in the US this does include everything like food, fuel and insurance etc.
    Inflation in Europe is also around 2%.

    Inflation in the US is higher because of the relative weakness of the dollar against the Euro, so fuel and food costs (food has to travel an average of around 1000 to 1500 miles to reach the end consumer) are higher than in Europe.

    The Fed wants to make us believe that inflation in the US is also around 2% but they use the phony core CPI so basically that number is way off.
    A couple of people on the web have started a project to make their own CPI which does include everything like fuel and food. It'll be interesting to see what the real US inflation number is when they publish that CPI.
    Increases in food production costs are directly attributable to rising oil costs as growing supplements (fertilizers/pesticides/irrigation), mechanical harvesting and transportation are the primary food component costs and 17% of US energy consumption. http://www.energybulletin.net/5173.html

    Since I have to subtract debt and supplementary funding from published government GDP numbers just to determine actual growth, I have little faith in government numbers. A US government 2% inflation number sticks in my throat when I look at USD devaluation and clock my personal expenses.
    These are my principles. If you don't like them I have others. ~Groucho Marx~

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    Quote Originally Posted by gamehuis
    Here's a good article that exposes the fraud of the core CPI and gives a glimpse at the real inflation rate in the US.
    The author does have a bit of a 'the sky is falling' writing style, but his numbers don't lie:

    http://www.financialsense.com/stormwatch/2005/0624.html
    Good article in spite of the feverish writing style.

    Unfortunately, maybe 1% of the general US population is interested in the fact that their government lies to them to keep all the balls in the air. Consumer confidence is all that's keeping those balls in the air and real numbers would create widespread panic.
    These are my principles. If you don't like them I have others. ~Groucho Marx~

  6. #6
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    Most noticeable increase here is cost of electricity, up about 46%. Some on limited incomes are shutting down air conditioning (not a good thing in Texas). Legislators eliminated a 10% electricity discount given to low incomes and used the money elsewhere. Texas legislators are struggling to find a way to fund education, but they did manage to find the funds for a nice pension plan for themselves.
    Dono
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    Our (that is; Swedish) inflation is estimated between 0,7 and 1,0 per cent (depending on what you choose to include in the basket). To be honest, this is a bit low. We need to increase consumption in order to increase employment and economic growth. Our central bank recently lowered the interest rate in order to encourage consumption and investment. Hopefully this has had the desired effect as bussineses are increasing investment and retails are inceasing sales. It`s is still unsure wether this will make a dent in the rather troubling unemployment figures we are currently experiencing.

    Here is a good table for the estimated inflation rate in the European union, broken dow countrywise. Interestingly enough, it doesn`t include any comparison to the US figures. Something that is fairly common when it comes to other types of indicators.

    Eurostat

    Here is the inflation for different baskets:

    Eurostat II

    Oh, and as is evidident from the figures, Gamehuis was correct about the inflation rate in europe.
    Knowledge is power. Hide it well.

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    Quote Originally Posted by Eddie
    Our (that is; Swedish) inflation is estimated between 0,7 and 1,0 per cent (depending on what you choose to include in the basket). To be honest, this is a bit low. We need to increase consumption in order to increase employment and economic growth. Our central bank recently lowered the interest rate in order to encourage consumption and investment. Hopefully this has had the desired effect as bussineses are increasing investment and retails are inceasing sales. It`s is still unsure wether this will make a dent in the rather troubling unemployment figures we are currently experiencing.

    Here is a good table for the estimated inflation rate in the European union, broken dow countrywise. Interestingly enough, it doesn`t include any comparison to the US figures. Something that is fairly common when it comes to other types of indicators.

    Eurostat

    Here is the inflation for different baskets:

    Eurostat II

    Oh, and as is evidident from the figures, Gamehuis was correct about the inflation rate in europe.
    Unlike the US, Europe hasn't taken the debt road to what's essentially false economic expansion resulting in inflation from a devalued dollar. If US published and supplemental debt is pulled from federal GDP numbers it makes for an interesting spreadsheet when plugging in federal revenue requirements including debt service at say 8%. The US consumer is taking big time hits from all directions without even realizing it. With US military costs, published and supplemental, I see no immediate relief with inevitable higher taxation at federal levels just to maintain basic social services.

    Right now substantial tax increases and increased public debt are taking place at US state and local levels to avoid the federal political stigma of failed economic policies and a declining tax base, but that's not sustainable. I'm not aware of that transpiring in Europe?
    These are my principles. If you don't like them I have others. ~Groucho Marx~

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    What I don't get is that we basically pay farmers to produce less or to not produce. So, why can't they just save a few dollars there, let some farmers produce and increase supply. This would hopefully drive food prices down.

    As for me, living in Tennessee, I haven't seen an increase in electricity at all since I believe most of our electricity comes from hydroelectric. Some of it comes from coal, I think, but I don't think that coal prices have been going up. Natural Gas through last winter, though, was higher than it usually is, but IIRC, it was actually lower than last year.

    But for retail goods and food, which are for some reason a little higher here than surrounding states, have been creeping up slowly but surely. Restaurants are raising prices, but that may have more to do with a huge hike in property taxes that recently passed. It was like a 67% increase a few years after a 40% increase. Everyone here is super-miffed about that.

    Anyway, I think there's more to it than just oil prices, but the price of gasoline has been keeping some basic goods high in price. The funny thing is that gas prices go up 24 hours (or sooner) after a hike in oil prices, but when the oil prices go down it takes a few days before you see a decrease in the price of gas, or you don't see it at all if the dip didn't last more than a few days.

  10. #10
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    Quote Originally Posted by gnojek
    What I don't get is that we basically pay farmers to produce less or to not produce. So, why can't they just save a few dollars there, let some farmers produce and increase supply. This would hopefully drive food prices down.
    Take a look at the link I posted http://www.energybulletin.net/5173.html and you'll have a clearer image of food production and how it impacts taxes and food prices.

    2005 is the first year the US will be a net food importer.
    These are my principles. If you don't like them I have others. ~Groucho Marx~

  11. #11
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    Quote Originally Posted by georged
    Unlike the US, Europe hasn't taken the debt road to what's essentially false economic expansion resulting in inflation from a devalued dollar.
    Oh, but we did. In the eightiees. And we all know where that led us...

    Quote Originally Posted by georged
    If US published and supplemental debt is pulled from federal GDP numbers it makes for an interesting spreadsheet when plugging in federal revenue requirements including debt service at say 8%. The US consumer is taking big time hits from all directions without even realizing it. With US military costs, published and supplemental, I see no immediate relief with inevitable higher taxation at federal levels just to maintain basic social services.
    The debt is one problem. The inflation is another (allthough they are certainly linked). In some ways, wouldn`t inflation without corresponding wage increases be something that you would welcome (albeit, perhaps not in this fashion)? I mean, isn`t one of the US problems being uncompetative in a global market due to high labour costs? And if it is, wouldn`t the real wage decrease (and corresponding labour cost decrease) due to inflation be an antidote to this problem?

    Sorry, for the many questions. It`s getting late...

    Quote Originally Posted by georged
    Right now substantial tax increases and increased public debt are taking place at US state and local levels to avoid the federal political stigma of failed economic policies and a declining tax base, but that's not sustainable. I'm not aware of that transpiring in Europe?
    Not that I`m aware of at least. We are struggling with low consumer confidence and high unemployment instead. this is not a big problem in the long run as long as it isn`t aggrevated and starts a downwards spiral though.

    Quote Originally Posted by gnojek
    What I don't get is that we basically pay farmers to produce less or to not produce. So, why can't they just save a few dollars there, let some farmers produce and increase supply. This would hopefully drive food prices down.
    I don`t know how it works in the US, but in Europe we have an unholy mix of subsidies, price control and tarrifs for agricultural products causing massive inefficiency. I`d take paying farmers to produce less or nothing anyday.
    Knowledge is power. Hide it well.

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    Quote Originally Posted by georged
    Take a look at the link I posted http://www.energybulletin.net/5173.html and you'll have a clearer image of food production and how it impacts taxes and food prices.
    Ah! It seems my picture of overabundance is outdated.

    2005 is the first year the US will be a net food importer.
    I was not aware of this.

    Amazing.

    So maybe Mark Elsis will turn out to be right afterall.
    He said people would starve by the 1970s, and millions did in the 1980s.
    But new technologies helped bump up production.
    But it looks like now it's a matter of land resources maybe.

    The whole problem is overpopulation, and whenever I hear someone complaining about the need for economic growth, and constant growth at that, I get a headache.

    http://www.overpopulation.net/

  13. #13
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    Quote Originally Posted by Eddie
    I don`t know how it works in the US, but in Europe we have an unholy mix of subsidies, price control and tarrifs for agricultural products causing massive inefficiency. I`d take paying farmers to produce less or nothing anyday.
    I think it pretty much works the same here.
    This "inefficiency" tends to weed out the little guy.
    The trend that bothers me is that the big factory farms tend to gobble up all the smaller family farms and in the end we get less variety, more incesticides, more polluted runoff, more animal cruelty, etc.

  14. #14
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    Quote Originally Posted by Eddie
    The debt is one problem. The inflation is another (allthough they are certainly linked). In some ways, wouldn`t inflation without corresponding wage increases be something that you would welcome (albeit, perhaps not in this fashion)? I mean, isn`t one of the US problems being uncompetative in a global market due to high labour costs? And if it is, wouldn`t the real wage decrease (and corresponding labour cost decrease) due to inflation be an antidote to this problem?
    If wages were dropping with inflation rising in a corresponding manner that would allow a competitive stance to balance trade in a reasonable period of time, yes, that would be an eventual solution. Right now our standard of living has risen so high that our 'poverty level' is higher than average incomes in most developed nations. Instead of easing into a reduced standard of living for the general population by biting the bullet and responsibly tightening purse strings, government policy has been subsidization of a false economy using debt to retain voter popularity. That's not sustainable as public debt will force interest rates up, as is now going on, not to curb domestic inflation but to sell treasury securities to foreign nations with valuable US markets to keep all the balls in the air. Once servicing massive public debt at say 8-10% interest rates eventually requires federal tax increases, public confidence (and consumer purchasing power) will decrease and put our internal transaction, unbalanced economy in serious straits.
    These are my principles. If you don't like them I have others. ~Groucho Marx~

  15. #15
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    [QUOTE=Eddie]We are struggling with low consumer confidence and high unemployment instead. this is not a big problem in the long run as long as it isn`t aggrevated and starts a downwards spiral though.
    QUOTE]

    You have positive trade, positive payment balance and low debt. Even with your service percentage of GDP you're in an excellent position to weather almost any general economic turndown. Your experience with using debt to drive your economy was short-lived and you learned your lesson. We just keep printing money.
    These are my principles. If you don't like them I have others. ~Groucho Marx~

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