Raul Paul Roasts Bernanke

[Orlando Salazar]

Nice post and nice bet on GS.

How & What u measure partly depends on how u will use those stats. To measure change in living standard? To determine optimal growth fosteringpolicies. To see how much power foreign economies have over domestic prices?

I think ur ? needs a bit more framing for a decent dialogue.

[Scary_Tiger]

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?

[Orlando Salazar]

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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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Most($) consumer goods are from China (pegged to USD) or made in US. If we purchased all European goods, we'd be in deep st.

[Borodog]

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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 think you have a huge potential problem in this in that the cost of many of these goods is directly dependent on other factors that ARE subject to great innovations. For example, if fuel costs decreased tremendously due to a new invention, the cost of milk would go down quite a bit. Newspapers are very dependent on the cost of labor, which clearly has huge impacts based on productivity (the computer made the costs of producing a newspaper go down tremendously), and cost of newspapers is usually a less important factor in their revenue as advertising.

I agree you are right that the way things are done poorly now, but even your basket of goods is still subject to much of the same problems.

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Nothing's prefect.

[Ineedaride2]

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Raul Paul lol.

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He only went by "Raul" during that brief stint doing pornos in college.

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I KNEW IT.

[Bump_Bailey]

BORODOG for Treasury Secretary.

[ConstantineX]

Borodog,

In his Senate and House speech, I think Bernanke kept on emphasizing that the Fed does pay attention to headline inflation. The reason they focus on core inflation, the argument goes, is that that's the only type of inflation they feel they Federal Reserve has the power to control. If food and energy are volatile in a short time range, then monetary policy can't do anyting to fix them - and they could stem from supply shocks (which we can't really control) rather than increased demand (which we sorta can).

[bobman0330]

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Borodog,

In his Senate and House speech, I think Bernanke kept on emphasizing that the Fed does pay attention to headline inflation. The reason they focus on headline inflation, the argument goes, is that that's the only type of inflation they feel they Federal Reserve has the power to control. If food and energy are volatile in a short time range, then monetary policy can't do anyting to fix them - and they could stem from supply shocks (which we can't really control) rather than increased demand (which sorta can)

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Right. Trying to come up with one number that is "inflation" is a quixotic quest. There might be one formulation that's most useful for monetary policy, one that's best for calculating COL increases, one that's best for deflating GDP, and one that's best for Austrian economic theorists, and they all might be different.

[Orlando Salazar]

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How & What u measure partly depends on how u will use those stats. To measure change in living standard? To determine optimal growth fosteringpolicies. To see how much power foreign economies have over domestic prices?

I think ur ? needs a bit more framing for a decent dialogue.

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QMSFT, in response to bobman0330

[DcifrThs]

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Nice post and nice bet on GS.

How & What u measure partly depends on how u will use those stats. To measure change in living standard? To determine optimal growth fosteringpolicies. To see how much power foreign economies have over domestic prices?

I think ur ? needs a bit more framing for a decent dialogue.

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thanks and good point.

to expand, the POINT of the measurement would be for a number of things:

1) a "true" measure of inflation would deliver on average, higher nominal interest rates while possibly leaving real rates unchanged, thus reducing distortions in the economy. imo though real rates would also rise since inflation as measured isn't insanely off the mark (by like 5-10% as some people claim), though not by as much as nominal rates. basically, giving those that steer the economy w/ a clear bias for lower rates a clearer mandate to deliver higher rates.

2) to have investors of TIPS and otherwise inflation linked mandates (i.e. endowments/foundations sometimes benchmark spending on a "real rate" of 5% /year so 5% of assets. if inflation is 2% and their earnings are 10% in a year, they'll set aside 7% of those earnings in nominal terms to spend. now w/ a higher inflation #, a truer inflation #, they would set aside more and deliver more charity now vs. later when it would be worth -arguably exponentially- less)

3) to know more where we stand overall. i think #s 1 and 2 pretty much cover it but i needed a #3 [img]/images/graemlins/smile.gif[/img]

hope this helps frame the question better,

Thanks,
Barron

PS- i'm obviously an idiot typist. lol @ Raul Paul indeed. and also lol @ boro's post about him going by raul in his porno days