Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

The Inflation Predictions Were Just Wrong, And Now They're Hurting People
TBI - Pragmatic Capitalism ^ | 6-22-2013 | Cullen Roche, Pragmatic Capitalism

Posted on 06/22/2013 1:25:44 AM PDT by blam

The Inflation Predictions Were Just Wrong, And Now They're Hurting People

Cullen Roche, Pragmatic Capitalism
June 21, 2013, 4:21 AM

Remember back when QE started and we saw charts of high powered money going vertical all over the place and everyone who didn’t understand modern banking said that the reserves would flood out into the economy causing high inflation or even hyperinflation? And do you also remember how most of those same people also said that the only way you’d be able to protect yourself from this hyperinflation was by owning hard assets like gold or silver? Well, the inflation never came. The most recent reading of 1.7% pretty much proves that we’re much more Japan than we are Weimar (and yes, even independent gauges confirm the low inflation story). And now the portfolio recommendations are falling apart as well….

It’s one thing to be wrong about the way banking works and the way inflation might spread. But most of these people were explicitly recommending a substantial overweight in gold and silver as well. And they’ve been annihilated in recent years. Gold is down 33% from its 2011 highs. And silver is down a staggering 60% since the time I started referring to it as a bubble. These are massive moves and if you’ve been substantially overweight these metals in your portfolio then you’ve experienced substantial pain based on sheer misunderstandings by people who are posing as experts.

The thing that really drives me crazy about this is that so much of this has come from the ideologically driven groups who were really selling nothing more than fear and hatred of the Fed and the government. Look, I know the government hasn’t done everything right and I am certainly no Federal Reserve apologist, but that doesn’t ever justify bad analysis and specific portfolio recommendations that are simply irresponsible. And that’s all we’ve seen here. People selling an ideology based more on politics than knowledge….


TOPICS: News/Current Events
KEYWORDS: economy; hyperinflation; inflation; recession
Navigation: use the links below to view more comments.
first previous 1-20 ... 41-6061-8081-100 ... 141-154 next last
To: muir_redwoods

I guess food and gas are 3 times what they were a few short years ago due to something other than inflation. They just happen to cost way more for some odd reason.


61 posted on 06/22/2013 5:56:53 PM PDT by little jeremiah (Courage is not simply one of the virtues, but the form of every virtue at the testing point. CSLewis)
[ Post Reply | Private Reply | To 11 | View Replies]

To: expat_panama; 1rudeboy
Has the BLS removed food or energy prices in its official measure of inflation?

No. The BLS publishes thousands of CPI indexes each month, including the headline All Items CPI for All Urban Consumers (CPI-U) and the CPI-U for All Items Less Food and Energy. The latter series, widely referred to as the "core" CPI, is closely watched by many economic analysts and policymakers under the belief that food and energy prices are volatile and are subject to price shocks that cannot be damped through monetary policy. However, all consumer goods and services, including food and energy, are represented in the headline CPI.

Most importantly, none of the prominent legislated uses of the CPI excludes food and energy. Social security and federal retirement benefits are updated each year for inflation by the All Items CPI for Urban Wage Earners and Clerical Workers (CPI-W). Individual income tax parameters and Treasury Inflation-Protected Securities (TIPS) returns are based on the All Items CPI-U.

Bureau of Labor Statistics

62 posted on 06/22/2013 6:10:13 PM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
[ Post Reply | Private Reply | To 57 | View Replies]

To: Toddsterpatriot

Really?

http://www.frbsf.org/education/publications/doctor-econ/2004/october/core-inflation-headline


63 posted on 06/22/2013 6:17:44 PM PDT by muir_redwoods (Don't fire until you see the blue of their helmets)
[ Post Reply | Private Reply | To 59 | View Replies]

To: muir_redwoods
Truly.

Databases, Tables & Calculators by Subject

64 posted on 06/22/2013 6:30:59 PM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
[ Post Reply | Private Reply | To 63 | View Replies]

To: Toddsterpatriot

CPI is not the inflation rate.


65 posted on 06/22/2013 6:35:15 PM PDT by muir_redwoods (Don't fire until you see the blue of their helmets)
[ Post Reply | Private Reply | To 64 | View Replies]

To: muir_redwoods
CPI is not the inflation rate.

Please tell me what is the inflation rate.

66 posted on 06/22/2013 6:50:31 PM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
[ Post Reply | Private Reply | To 65 | View Replies]

To: Toddsterpatriot

The rate varies; the definition does not. Please see attached and note that the definition of inflationg specifically excludes food and fuel

http://www.econedlink.org/economic-resources/focus-on-economic-data-inflation.php


67 posted on 06/23/2013 2:45:09 AM PDT by muir_redwoods (Don't fire until you see the blue of their helmets)
[ Post Reply | Private Reply | To 66 | View Replies]

To: muir_redwoods

CPI, in my link, post #64, specifically includes food and fuel.


68 posted on 06/23/2013 8:23:51 AM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
[ Post Reply | Private Reply | To 67 | View Replies]

To: muir_redwoods
There is "core" CPI and "headline" CPI. You can't point at "core," and claim that "headline" does not exist.

Think of it this way: The government counts trees, and counts trees and shrubs.

You can't point at the tree count alone and claim that shrubs are not counted.

69 posted on 06/23/2013 10:11:22 AM PDT by 1rudeboy
[ Post Reply | Private Reply | To 67 | View Replies]

To: muir_redwoods
Consumer Price Index - All Urban Consumers

12-Month Percent Change
Series Id: CUUR0000SA0
Not Seasonally Adjusted
Area: U.S. city averageItem:
All items
Base Period: 1982-84=100


70 posted on 06/23/2013 10:15:48 AM PDT by Toddsterpatriot (Math is hard. Harder if you're stupid.)
[ Post Reply | Private Reply | To 67 | View Replies]

To: Toddsterpatriot
Unless I'm reading this incorrectly, the June 18th CPI press release has core inflation increasing slightly less than headline inflation. So much for the theory that food and energy are excluded in order to lower the number.
71 posted on 06/23/2013 10:26:35 AM PDT by 1rudeboy
[ Post Reply | Private Reply | To 70 | View Replies]

To: Toddsterpatriot; 1rudeboy

Fascinating. If I were discussing CPI, it would be even more fascinating. Government figures for inflation, which I was discussing, do not include food or fuel.


72 posted on 06/23/2013 1:33:04 PM PDT by muir_redwoods (Don't fire until you see the blue of their helmets)
[ Post Reply | Private Reply | To 70 | View Replies]

To: DannyTN

“And the FED doesn’t control government spending”

The fed sucks in money as profits. That’s a tax, so it is controlling spending.

The fed controls interest rates which is more manipulating fed profit and the economy.

The fed has done a lousy job is an unconstitutional organization that controls our fiat money supply and central banking.


73 posted on 06/23/2013 1:39:52 PM PDT by CodeToad (Liberals are bloodsucking ticks. We need to light the matchstick to burn them off. -786 +969)
[ Post Reply | Private Reply | To 3 | View Replies]

To: Alberta's Child

“then we have $4 in activity from my original $1”

Wrong. You assume it was the dollar that did that.

It was individual labor and desire that did that. Money was only the exchange rate.

Had you put that dollar in your pocket and the fed went and printed 3 more, you’d only have 1/4 the buy value you once had and the newpaper guy doesn’t want $1, he now wants $4. Thank the fed for that.


74 posted on 06/23/2013 1:42:23 PM PDT by CodeToad (Liberals are bloodsucking ticks. We need to light the matchstick to burn them off. -786 +969)
[ Post Reply | Private Reply | To 26 | View Replies]

To: DannyTN

“The purpose of currency is facilitate business transactions, not to be a long term store of value.”

Who in the world told you THAT?? Money is a storage of labor as we are paid for our labors with it. When money is devalued it devalues our labor, our lives. It is theft.


75 posted on 06/23/2013 1:44:00 PM PDT by CodeToad (Liberals are bloodsucking ticks. We need to light the matchstick to burn them off. -786 +969)
[ Post Reply | Private Reply | To 34 | View Replies]

To: DannyTN

“The purpose of currency is facilitate business transactions, not to be a long term store of value.”

So, if that is the case, then exactly how long should someone be “allowed” to keep money before the fed is allowed to devalue it thereby stealing its “business transaction” potential? 1 day, 1 week? How long before the fed is allowed to steal it or just come and take it all?

You think like a liberal that money is only something we are allowed to keep because it eventually all belongs to the government. We often hear Democrats say, “To give you a tax break is something we cannot afford.”, and, “We allow you to keep what we can.”

Sorry, but money is the value of life, not some arbitrary business transaction. My life isn’t business.


76 posted on 06/23/2013 1:46:54 PM PDT by CodeToad (Liberals are bloodsucking ticks. We need to light the matchstick to burn them off. -786 +969)
[ Post Reply | Private Reply | To 34 | View Replies]

To: muir_redwoods
Government figures for inflation, which I was discussing, do not include food or fuel.

A comment I demonstrated to be false in my comment #71.

77 posted on 06/23/2013 1:49:07 PM PDT by 1rudeboy
[ Post Reply | Private Reply | To 72 | View Replies]

To: DannyTN

“You’re not seeing inflation because the credit crisis was so severe that money supply shrunk dramatically.”

Wrong, again.

The money supply has significantly increased as the fed has printed like never before (Helicopter Ben didn’t get his name for nothing. He claimed he would print, print, print, and spread money via helicopter), however, bank holdings were below their stated values so the banks kept the money, businesses also have over $20 trillion in cash when they held only $12 trillion in recent years, and personal bank accounts also grew.

People are simply not spending due to the fear of Communism by Obama and his fellow Communist in Congress. People fear Obamacare and being broke. They fear the extremely high unemployment and save instead. 401(k) plans are at an all time high for saving as people fear being broke and unemployed.


78 posted on 06/23/2013 1:50:39 PM PDT by CodeToad (Liberals are bloodsucking ticks. We need to light the matchstick to burn them off. -786 +969)
[ Post Reply | Private Reply | To 33 | View Replies]

To: expat_panama

“The Fed creates money because the constitution said congress had to “

Wanna show us where the Constitution says the fed has to use fiat currency? I am pretty sure the founding father warned us against using fiat currency and wanted the fed to only use gold and silver as a currency base. I always do my own research but I can’t for the life of me find where the Constitution says the Congress is to create a federal central banking system and print fiat currency. Can you give us the Article and Section for that?


79 posted on 06/23/2013 1:53:25 PM PDT by CodeToad (Liberals are bloodsucking ticks. We need to light the matchstick to burn them off. -786 +969)
[ Post Reply | Private Reply | To 50 | View Replies]

Consumer Price Index - CPI

Definition of 'Consumer Price Index - CPI' A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care. The CPI is calculated by taking price changes for each item in the predetermined basket of goods and averaging them; the goods are weighted according to their importance. Changes in CPI are used to assess price changes associated with the cost of living.

Sometimes referred to as "headline inflation."

_____

Investopedia explains 'Consumer Price Index - CPI'

The U.S. Bureau of Labor Statistics measures two kinds of CPI statistics: CPI for urban wage earners and clerical workers (CPI-W), and the chained CPI for all urban consumers (C-CPI-U). Of the two types of CPI, the C-CPI-U is a better representation of the general public, because it accounts for about 87% of the population.

CPI is one of the most frequently used statistics for identifying periods of inflation or deflation. This is because large rises in CPI during a short period of time typically denote periods of inflation and large drops in CPI during a short period of time usually mark periods of deflation.

There's a video at that link, if you still don't understand.
80 posted on 06/23/2013 1:53:44 PM PDT by 1rudeboy
[ Post Reply | Private Reply | To 77 | View Replies]


Navigation: use the links below to view more comments.
first previous 1-20 ... 41-6061-8081-100 ... 141-154 next last

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson