Disposable income falls as prices jump, data show

Hey Al, You’re a good guy, I’m a good guy, and we don’t want to play this game others seem to like of lobbing posts intended to make the reader feel bad. We know that our nation’s important and likewise the economy.

Let’s get back to the ‘substitution effect’, I was hoping you’d help me see what, how, and where it’s affecting the PCE.

Because the "unvarnished" CPI is 10% while the 10-year Treasury is yielding 3.83% and 10 year triple A rated corporate debt yields 4%.

Do you have any idea just how ridiculous you are?

Whom should we believe, some ridiculous economic illiterate posting on FR and a guy selling a doomer newsletter, or the massive global bond market?

Sorry, algernon, no flowers for you. Only epic fail.

Once again:
In addition to separating out the cost of food and energy from core inflation, there are several biases understating inflation that have been built into the CPI.

Originally the CPI was designed to measure the cost of a fixed basket of goods, i.e. comparing apple to apples. The rationale behind this was to be able to accurately measure return on investment in relation to inflation, and to be able to accurately measure how the standard of living one can afford on a given income stands in relation to inflation.

The CPI has been corrupted by the addition of hedonics, the substitution effect, and weighting, soft metrics that are open to political manipulation and artificially lower inflation. The CPI has changed from measuring inflation in relation to a set standard of living to measuring inflation in relation to a declining standard of living.

Corruption of the CPI is important because it is used by the Federal Reserve to justify its money printing policies, to set the interest rate on inflation-adjusted bonds known as TIPS, and by the federal government to calculate cost-of-living adjustments (COLA) for the entitlement programs (e.g., Social Security). The more inflation is understated, the higher the inflation-adjusted rate of GDP growth that gets reported. In addition, the CPI influences interest rates, the stock market, and a host of salary and pension negotiations each year

More Information Them’s the facts. Insults, name calling, obfuscation, mockery, non-sequitors, changing the subject, and disingenuous comments don’t change the facts.

"Once again" we're rehashing what we already know, the fact you don't like the CPI and you're not saying what adjustments you do want for putting together an index. Sure, you like whatever the Shadowstats folks came up with but that's just it, we don't know what numbers their using or why. We only know you like them.

Eventually though, let's try and get back to PCE trends like the article's talking about.

there are several biases understating inflation that have been built into the CPI.

And you can only assume that Williams' magic adjustment somehow cures those biases. Too bad he doesn't actually prove anything by doing the actual work.

Them’s the facts.

Williams' "real CPI" doesn't contain real facts.

The CPI has been corrupted by the addition of hedonics, the substitution effect, and weighting, soft metrics that are open to political manipulation and artificially lower inflation.

In one breath you claim the CPI has been corrupted. In another you claim that these things are open to political manipulation etc. I keep hoping that in some yet to be delivered breath, you'll prove to us that the CPI has been corrupted -- with something factual rather than with fantasies supplied by Williams and his shadowstats nonsense.

The entire bond market says you don't have any idea what you're talking about. When will you show us how you and Williams know more than the entire global bond market?

Standing by.......

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