Re: If there no inflation how come
Posted by:
Bill N
()
Date: December 12, 2010 12:11PM
justsayin Wrote:
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>
> +1, I wish people could possibly understand these
> things, but it is much easier to spend time
> reading about Miley Cyrus and a bong than educate
> oneself in how inflation numbers are calculated.
Many people do UNDERSTAND these things, but when your cost of living is going up 5 to 10% a year it is hard to believe that someone isn't playing with the books.
Frankly I always found the notion of a CPI to be meaningless. It isn't price changes generally that matter to most of us; it is changes in the prices of the goods and services that we purchase that matter. For example when real estate prices were rocketing to the stars, the effect of those prices differed depending on whether you were an existing homeowner, a home buyer who financed at lower interest rates, a home buyer who paid cash or a renter. Same is true of the decline in real estate prices. The fact that the computer, refrigerator or other durable good that I purchased last year is available cheaper today doesn't matter, because I am not going to purchase another one this year. And when you have to shift to a higher priced substitute because a manufacturer stopped making (or your local retailer stopped selling) a product that you used, it does not matter what that substitute good cost last year.