Inflation: Not as low as you think

[doom&gloom]

not like any of us don't already know this but.... nice to see the MSM is starting to find a little honesty on the subject.

http://www.cbsnews.com/8301-505144_1...-as-you-think/

Forget the modest 3.1 percent rise in the Consumer Price Index, the government's widely used measure of inflation. Everyday prices are up some 8 percent over the past year, according to the American Institute for Economic Research.

*snip*

The soy crop is looking good down south, prices are looking good too...

[Starving Steve]

Re: Inflation: Not as low as you think

I see more shrinkage in product sizes, things like: spaghetti sauce bottles/cans, coffee cans, condiment bottles/cans, detergent boxes, cake sizes, take-out BBQ chicken and rib sizes, micro-sizing for Mexican food including salsas and even salsas sent-up from Mexico, processed food sizes, milk-carton shrinkage, pop-can shrinkage, cup-cake shrinkage, and even some produce shrinkage such as the size of bundles of things --- but not a decline in the price per bundle, etc.

Inflation is galloping now, and this is even more dramatic at the grocery store than the shrinkage games played there during the 1970s, especially during Jimmy Carter days.

So the bottom-line is that low interest rates DO BREED INFLATION. I thought maybe I was wrong about it, but low interest rates beg for more spending, especially by government. Low interest rates create a climate for more borrowing and bigger deficits. And in the case of America, low interest rates set-the-stage for monetization of the federal deficit through Quantitative Easing aka Q.E.

So, the bottom-line in this tragedy is that the economists at the Federal Reserve Bank are trying to inflate the nation's (and the world's way) out of this Great Recession by practicing more of the same old Keynesian economics that led much of the world into this economic mess in the first place. And it isn't just the Federal Reserve Bank in Washington that is inflating the currency, but most all of the world's central banks are doing the same thing, too.

During the 1970s some central banks de-valued their currency against each other, in order to gain a temporary trade advantage. This led to the famous hyper-inflations of those years, especially in Israel, Biafra, Mexico, Equador, Brazil, Paraguay, Bolivia, Peru, Jamaica, Argentina, Indonesia, Vietnam, Turkey, Columbia, Laos, Zaire, Zimbabwe, Costa Rica, Chile, Paraguay, Nicaragua, Hungary, Czechoslovakia, Yugoslavia, Poland, Angola, Cuba, the U.S.S.R, Greece, Pakistan, North Korea, pre-1949 China, and the Phillipines, etc.

When I had my coin shoppe in Edmonton for a few years, I used to buy this competitive de-valuation wallpaper for 5c or 10c per note, and I would sell it retail over-the-counter for 10c to 25c per banknote.... And kids and their dads used to come in on Saturdays and play in the heap of worthless, but colourful and interesting, inflation money.

[Slimprofits]

Re: Inflation: Not as low as you think

There are some products that don't change. I wonder where Steve shops? Sounds like the store is repackaging several items:

A quart, or half gallon or gallon of milk is still a quart, or half gallon or gallon of milk.
Store bought "Spaghetti sauce" glass jars have been 24 ounces for as long as I can remember. Ragu, Prego, Classico, Rao's, etc. and the "store" brands.
Cans of soda are still 12 ounces. if you bought 8 ounce cans at the same price, you're simply not paying close enough attention.

[don]

Re: Inflation: Not as low as you think

from Shadowstats . . .

[gwynedd1]

Re: Inflation: Not as low as you think

Inflation is too simplistic a term. What we have is stagflation which is simply a declining share of wealth going to labor. We have wage deflation relative to assets. Any product like food is closely tired to assets beneath it, namely farm land prices. That is clearly the result of ZIRP policy as opposed to fiscal deficit policy.

[don]

Re: Inflation: Not as low as you think

ZIRP - a masterly sleight of hand in the transfer of wealth . . . .

[LazyBoy]

Re: Inflation: Not as low as you think

I see more shrinkage in product sizes, things like: spaghetti sauce bottles/cans, coffee cans, condiment bottles/cans, detergent boxes, cake sizes, take-out BBQ chicken and rib sizes, micro-sizing for Mexican food including salsas and even salsas sent-up from Mexico, processed food sizes, milk-carton shrinkage, pop-can shrinkage, cup-cake shrinkage, and even some produce shrinkage such as the size of bundles of things --- but not a decline in the price per bundle, etc.

At a TGI Fridays for lunch recently, I overheard someone order a draft beer. The waitress asked if they wanted 14 or 20 ounces. Traditionally, it's 16 or 23.

Some months ago, their lunches started coming with fewer fries. The sandwiches now come with the top bun off and next to the sandwich, so the plate doesn't have a large bare spot...

Order a diet soda, and the waitress will ask if you want the lemon!

[jk]

Re: Inflation: Not as low as you think

a lot of "hidden" [i.e. not officially recognized] inflation will be required to deal with off balance sheet liabilities like social security. unfortunately, hidden inflation will not solve the long term medicare funding problem.