Raul Paul Roasts Bernanke

[xorbie]

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IMO, the best measure of price inflation is not a gigantic "basket of goods" that is heavily subject to manipulation, but rather the prices of homogeneous (or mostly so) goods that have many suppliers and many consumers and are not subject to great innovations in quality, like milk, eggs, white bread, newspapers, etc.

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I really like this point, my only question would be whether or not energy and fuel costs would enter into your equation.

edit: Covered, ignore.

[DcifrThs]

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The most ridiculous argument Bernanke threw out there was IMO, that retirees aren't hurt by a devaluation of the dollar, because they're buying consumer goods with the dollar? If the dollar is worth less, than companies have to charge more, ldo?

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keep going with your example. you'll find that on the whole, companies will not increase prices for a number of reasons. so by going the company passing charges through route, you'll see that the actual costs paid in dollars aren't anywhere remotely close to the change in the value of the dollar on the int'l market. it would be like saying "omg, the dollar is strengthening, companies are charging less so we have more mani." by "we" i obviously mean those who consume almost entirely in dollars. in reality, it is the company that reaps the rewards in the form of higher margins. there are a ton of other variables here but i'm talking in the aggregate. the change in value of a dollar on the FX market doesn't have a big effect on those that consume almost entirely in dollars one way or the other...

overall, that answer was one of his better ones imo.

historical tests bare this out also (a reduced dollar doesn't have a huge effect on those that consume almost entirely in dollars).

Barron

[tomdemaine]

The thing is inflation doesn't really mean anything. It's taken on a mystical significance because it's another complicated and scary term that governments can use to increase their power base. "well we need a government or the inflation demon will get us". It's purposefully arbitrary and ill defined to keep most people in the dark. I don't need to know inflation is 10% I just need to know how much more my rent is than last year how much less my car's worth and so on. Bundling it all up serves no purpose for me it only serves those in power which I presume is why it is talked about so much and with so much reverence.

[DcifrThs]

Boro,

i like your basket of goods that have many suppliers idea. managing/determining it though obviously has issues...but as you said, nothing is perfect.

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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.

i'm not saying CPI is the answer, but that changes in money supply isn't the obvious answer either.

Barron

[Borodog]

I'm saying that money supply inflation is the driver, not that every price in the economy responds in the same way or in the same time frame. They don't. Some prices rise, others fall, and the time spectrum over which these changes take place relative to the time of the credit expansion is complex. I may go into it some other time, but I have to jump in the shower and go teach some swing ans salsa.

[ConstantineX]

[ QUOTE ]

[ QUOTE ]
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.

[/ QUOTE ]]

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.


[/ QUOTE ]

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.

[DcifrThs]

[ QUOTE ]
[ QUOTE ]

[ QUOTE ]
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.

[/ QUOTE ]]

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.


[/ QUOTE ]

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.

[/ QUOTE ]

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

[Borodog]

All of the last two posts are wrong. Somebody PM me later to correct it. Got to run.

[tolbiny]

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]

[ QUOTE ]
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.

[/ QUOTE ]]

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.


[/ QUOTE ]

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.

[/ QUOTE ]

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

[/ QUOTE ]

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.

[Luxoris]

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[ QUOTE ]
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.

[/ QUOTE ]]

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.


[/ QUOTE ]

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.

[/ QUOTE ]

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

[/ QUOTE ]

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.