[Luxoris]

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The moral of the story is that these economy wide econometric numbers really AREN'T that useful. The only number that is useful, imo, really IS the money supply. That's the one that drives the rest. It's the one that allows you to see the man behind the curtain and what he is doing to you and the economy.

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this, however, is what i was talking about. real life, in the form of people living day to day hasn't been robbed like ron paul and you imply wiht this to the degree that the money supply increases.

sure, milk is whatever it costs, but that isn't a 20% yearly increase (or whatever money has averaged over a long time). further, important things like durable goods etc. aren't changing anywhere near what the money supply would imply they are.

additionally, money supply #s catch huge flows from assets to bank notes/credit etc. that aren't useful and bias upwards your "true" measure of inflation.


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Agree wholeheartedly with Barron here. This is where some of Ron Paul's supporters get me - how can you suggest inflation is higher than GDP growth over the amount of time we've been meaning measuring it faithfully? Shouldn't we have noticed a fairly severe decline in our standards of living by now? More importantly, even if headline inflation were as high as you suggest, it doesn't matter if the market has correct expectations of future inflation and adjusts nominal interest rates accordingly. If the government's numbers were completely wrong, we'd expect to see serious increases in interest rates as well as an added risk premium for not knowing the "true inflation rate" - moreover, an entrepreneurial opening for some firm that would collate and collect the true inflation rate that the market is trying to discover.

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yea, wow. that is a HUUUUGE point that i've overlooked. well done.

basically, when you read (well written/researched) articles about other countries you see the "official" inflation figures and then the "estimated" figures (by some think tanks in that country and/or the US/developed world).

if the inflation #s were hugely off (as they are in those cases) a think thank would definitely be able to pick it apart. but their value in doing so is minimal if the #s aren't off by a ton and rather only off by a little here and there (i.e. <5-10% as many as i've mentioned claim).

well said.

Barron

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I think your mistaken in thinking these places don't exist because your hung up on precision. Take a look at Peter Schiff's site, he has years of video interviews where he's the bear and the bulls laugh at him and talk about the record high for the Dow and how inflation is low. They ask him what he thinks real inflation should be and he basically says I don't know (sometimes he throws out a number in the 8-10% range). But he doesn't care about the number, he just cares about the concept, and once he got that right he's been killing the Bulls returns for nearly 10 years.

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ORLY. Do you have a link to his recommended portfolio returns?

AFAIK he's a book seller who's been predicting "impending doom" for the US economy for 20+ years, and Ive seen no verifiable track record of any specific portfolio. He's also a huckster for precious metals brokers. His support of Rue (not Raul) Paul is the surest path he could take to fulfilling his prophecies.