• This is a political forum that is non-biased/non-partisan and treats every persons position on topics equally. This debate forum is not aligned to any political party. In today's politics, many ideas are split between and even within all the political parties. Often we find ourselves agreeing on one platform but some topics break our mold. We are here to discuss them in a civil political debate. If this is your first visit to our political forums, be sure to check out the RULES. Registering for debate politics is necessary before posting. Register today to participate - it's free!

For those that say the government fudges inflation numbers may I present....

JP Hochbaum

DP Veteran
Joined
Feb 7, 2012
Messages
4,456
Reaction score
2,549
Gender
Male
Political Leaning
Independent
The Billion Prices Index:

US Daily Index » The Billion Prices Project @ MIT

"The Billion Prices Project is an academic initiative that uses prices collected from hundreds of online retailers around the world on a daily basis to conduct economic research.

This page shows our most recent research leveraging high-frequency price data, as well as the US daily inflation index (updated monthly on this page)."
 

austrianecon

DP Veteran
Joined
Dec 2, 2012
Messages
7,347
Reaction score
1,342
Gender
Undisclosed
Political Leaning
Libertarian
The Billion Prices Index:

US Daily Index » The Billion Prices Project @ MIT

"The Billion Prices Project is an academic initiative that uses prices collected from hundreds of online retailers around the world on a daily basis to conduct economic research.

This page shows our most recent research leveraging high-frequency price data, as well as the US daily inflation index (updated monthly on this page)."

Oh look there are huge gaps in the official number and what's collected by MIT.. for example a gap of all most 2 on 6/29/2013. Love to see the 2002-2007 numbers.. that'll be a dozy.

But my contention with US Government bias of inflation comes from it's calculation, the weighting they use.
 

pinqy

DP Veteran
Joined
Dec 20, 2012
Messages
6,453
Reaction score
2,642
Location
Northern Virginia
Gender
Male
Political Leaning
Centrist
Oh look there are huge gaps in the official number and what's collected by MIT.. for example a gap of all most 2 on 6/29/2013.
Well, yeah...completely different market baskets...there are going to be large differences.

Love to see the 2002-2007 numbers.. that'll be a dozy.
The BPP didn't exist then.

But my contention with US Government bias of inflation comes from it's calculation, the weighting they use.
What issue do you have with the weighting?
 

imagep

Villiage Idiot
DP Veteran
Joined
May 7, 2010
Messages
24,399
Reaction score
10,426
Location
Upstate SC
Gender
Male
Political Leaning
Independent
Oh look there are huge gaps in the official number and what's collected by MIT.. for example a gap of all most 2 on 6/29/2013. Love to see the 2002-2007 numbers.. that'll be a dozy.

But my contention with US Government bias of inflation comes from it's calculation, the weighting they use.

Just from glancing at the graphs, it appears to me that this third party inflation index is pretty much verifying the government numbers. the article doesn't indicate if the "basket" is the same at the guberment basket, maybe it is, maybe it's not, we don't know.

So I assume that you are suggesting that the guberment basket is heavily weighted in stuff that tends not to go up in price very much, and lower weighted in stuff that tends to go up. And I also assume that you are implying that the typical consumer spends most of his money on stuff that goes up a lot, and very little money purchasing stuff that doesn't go up much. Can you provide any specific examples?
 

austrianecon

DP Veteran
Joined
Dec 2, 2012
Messages
7,347
Reaction score
1,342
Gender
Undisclosed
Political Leaning
Libertarian

austrianecon

DP Veteran
Joined
Dec 2, 2012
Messages
7,347
Reaction score
1,342
Gender
Undisclosed
Political Leaning
Libertarian
So I assume that you are suggesting that the guberment basket is heavily weighted in stuff that tends not to go up in price very much, and lower weighted in stuff that tends to go up. And I also assume that you are implying that the typical consumer spends most of his money on stuff that goes up a lot, and very little money purchasing stuff that doesn't go up much. Can you provide any specific examples?

It simple comes down to this.. Pingy will object and try and correct me but whatever.

Is under the current calculations done by BLS for CPI assumes all of us will accept a decreased living standard. Basically if steak goes up 5% and ground beef goes up 1% Government assume we'll eat more ground beef. While that maybe true or not that's accepting a lower living standard. The reality is that consumers have been priced out of steak due to price increases. Government should be calculating what it takes to increase living standard, not a decreased living standard.

This was written in 1997.
How To Rewrite Economic History - 97.04

This was written in 2010 when Boskin bitched about other countries doing the same thing.
Sheehan on Michael Boskin | The Big Picture


My other grip is 1983 CPI rules changed on housing. If you look at a chart of US income inequality you'll find that's the period in which wealth gap started to grow.

Two massive parts of someones budget.. house and food.
 

Onion Eater

Well-known member
Joined
Jun 28, 2008
Messages
753
Reaction score
139
Location
Scottsdale, AZ
Gender
Male
Political Leaning
Libertarian
Can you provide any specific examples?

In 1930 Hayek predicted “monetary theory will not only reject the explanation in terms of a direct relation between money and the price level, but will even throw overboard the concept of a general price level” (1967, p. 29).

Yet this general price level is still with us. The 5 March 2003 edition of USA Today reports that, in the past year, prices for gasoline were up 29.3%, fuel oil 21.0%, health care 9.2% and tuition 6.3%, which is bad news because these are all fixed costs that working class Americans are committed to paying. But prices for personal computers fell 20.7%, information processing 11.9%, men’s clothing 3.9% and autos 2.8%, which is also bad news because information processing and the manufacture, marketing and service of computers, clothing and autos are where most people’s jobs are. So what is the response of mainstream economists? They report the arithmetic average of these numbers, 3.3%, and announce that “inflation is under control and there is no sign of deflation.”

Considering his strong words against price indexes (1966, pp. 219-223), if Mises has kept up on the affairs of the living with a posthumous subscription to USA Today, he must be rolling in his grave. This author also writes about this excessive tendency towards aggregation: “The assertion of mainstream economists that the average level of prices in an economy is a meaningful statistic has done more damage to their credibility than any other assertion they have made.... Such an average is not just ludicrous but it is definitionally without meaning, for one need only ask in what units the result is expressed and one has found a contradiction” (1999, pp. 144,149).

Opposition to an average price level belongs to the legacy of Mises, though it was Hayek who put the question to the English:

Friedrich Hayek said:
If we have to recognize that, on the one hand, under a stable price level, relative prices may be changed by monetary influences, and, on the other that relative prices may remain undisturbed only when the price level changes, we have to give up the generally received opinion that if the general price level remains the same, the tendencies towards economic equilibrium are not disturbed by monetary influences, and that disturbing influences from the side of money cannot make themselves felt otherwise than by causing a change of the general price level (1967, p. 28).

Source: Critique of Austrian Economics
 

pinqy

DP Veteran
Joined
Dec 20, 2012
Messages
6,453
Reaction score
2,642
Location
Northern Virginia
Gender
Male
Political Leaning
Centrist
It simple comes down to this.. Pingy will object and try and correct me but whatever.

Is under the current calculations done by BLS for CPI assumes all of us will accept a decreased living standard.
Untrue. The CPI is designed to measure a constant standard of living.


Basically if steak goes up 5% and ground beef goes up 1% Government assume we'll eat more ground beef.
Untrue. The weights (including the chained CPI) are based on actual expenditures. So if people are eating more ground beef, then that will get more weight, eventually, but there's a linking process so that a constant standard of living is maintained.

Now, for the CPI-U and CPI-W, they do use a geometric means for item level..such as ground beef or steaks, but ground beef and steak are seperate categories. A geomeans average will be lower than an arithmetic average (but not by much) and is used to assume some substitution to an item with a lower price increase. For example, if ground beef goes up in price, but 95% lean ground goes up by less than 90% ground, then many people will switch to 95%. And the reverse is true.

While that maybe true or not that's accepting a lower living standard.
But it's not. When the weights are updated, there's a linking process to prevent measuring a change in standard of living. For the chained CPI, it takes the average of the weights from the previous period and the current period.
 

imagep

Villiage Idiot
DP Veteran
Joined
May 7, 2010
Messages
24,399
Reaction score
10,426
Location
Upstate SC
Gender
Male
Political Leaning
Independent
Maybe I am overly simplistic, but I don't see that it makes a lot of difference in ones standard of living whether they eat steaks or ground beef. If steaks go up more than ground beef, and if people chose to eat more ground beef, then the price of steaks will tend to stablize or even go back down a tad, allowing people to be able to start eating more steaks again. The market is always moving towards equalibrium.

However, if I no longer need to purchase a stand alone GPS system because there is one built into my smart phone, and assuming that the cost of smart phones doesn't rise, haven't I actually had an increase in purchasing power due to no longer having the need for a stand alone GPS system? I would think that substitutions of this nature would have a more positive increase in my standard of living, than temporarily shifting a small percent of my food consumption from steaks to ground beef. Saving $300 by not needing to purchase a GPS system (or atlas or maps or spending hours being lost) will buy a heck of a lot of steaks. This is the type of change in our economy that probably isn't indicated in most measures of inflation, and is part of the reason that most measures of inflation may actually overstate inflation instead of understating it.
 

specklebang

Discount Philosopher
DP Veteran
Joined
Jan 13, 2012
Messages
11,524
Reaction score
6,769
Location
Las Vegas
Gender
Undisclosed
Political Leaning
Other
Maybe I am overly simplistic, but I don't see that it makes a lot of difference in ones standard of living whether they eat steaks or ground beef. If steaks go up more than ground beef, and if people chose to eat more ground beef, then the price of steaks will tend to stablize or even go back down a tad, allowing people to be able to start eating more steaks again. The market is always moving towards equalibrium.

However, if I no longer need to purchase a stand alone GPS system because there is one built into my smart phone, and assuming that the cost of smart phones doesn't rise, haven't I actually had an increase in purchasing power due to no longer having the need for a stand alone GPS system? I would think that substitutions of this nature would have a more positive increase in my standard of living, than temporarily shifting a small percent of my food consumption from steaks to ground beef. Saving $300 by not needing to purchase a GPS system (or atlas or maps or spending hours being lost) will buy a heck of a lot of steaks. This is the type of change in our economy that probably isn't indicated in most measures of inflation, and is part of the reason that most measures of inflation may actually overstate inflation instead of understating it.

Yes, but pity the older folks who never buy a smartphone. They go to the grocery store and the drugstore. They pay for utilities that they need more of 'cause they ain't as tough as they used to be.

The only index that would matter would be a basic necessity list.
 

pinqy

DP Veteran
Joined
Dec 20, 2012
Messages
6,453
Reaction score
2,642
Location
Northern Virginia
Gender
Male
Political Leaning
Centrist

austrianecon

DP Veteran
Joined
Dec 2, 2012
Messages
7,347
Reaction score
1,342
Gender
Undisclosed
Political Leaning
Libertarian
Disagree? But it's not a matter of opinion, it's a question of fact. Partly in response to Shadowstats' false claims, BLS wrote Common Misconceptions
And Williams responded with Response to BLS article where he admits that no, hamburger is not substituted for steak.

It's a matter of opinion as it's how you "read" it. You've admitted CPI-U and CPI-W already use substitution in it's process. http://www.debatepolitics.com/economics/168269-those-say-government-fudges-inflation-numbers-may-present.html#post1062168526

Williams said:
I have never claimed that the BLS "assumes that consumers are no worse off when they substitute hamburgers for steak." Quite to the contrary, I have always argued that those giving such a rationale as to why the CPI purportedly overstated inflation knew very well that consumers were worse off with hamburger, and that the pitchmen were looking to change the concept of the CPI so that it no longer measured the cost of maintaining a constant standard of living. Such clearly was the case in the early-to-mid 1990s and was reflected in official arguments and press of the time. Much of what happened here was forced upon the BLS by the political system, but such is the BLS’s primary client.

The Boskin Commission Report, December 4, 1996, actually used steak and chicken for its substitution example. The examples being used to argue for changing the CPI clearly were tied to prices rising and resulting consumer demand shifting to a lower-quality product. Simply put, that is a cost-of-maintaining-a-constant-standard-of-living issue and was a primary consideration of those seeking to change the CPI, although other issues would come into play.

Response to BLS Article on CPI Misconceptions (your link)

So in two case, yourself admitting there is some substitution calculation and then using Williams response to the BLS propaganda machine.

My using Hamburger for Steak was for point and still holds true because while in separate categories it's still used to measure the overall inflation. If the weight given to steak vs hamburger is depended on assumption of usage due to price changes it skews the calculation of inflation. As Steak would be less of the weight then hamburger over a two year weighting period despite the fact Steak is widely bought by every household.
 

Kushinator

I'm not-low all the time
Supporting Member
DP Veteran
Joined
Jan 2, 2006
Messages
21,784
Reaction score
8,582
Location
Venice Beach, FL
Gender
Male
Political Leaning
Independent
Disagree? But it's not a matter of opinion, it's a question of fact. Partly in response to Shadowstats' false claims, BLS wrote Common Misconceptions
And Williams responded with Response to BLS article where he admits that no, hamburger is not substituted for steak.

Thank you. I grow tired of hearing this from right-wing media personalities, e.g. a guy a actually like in Rick Santeli, on a daily basis.
 

Kushinator

I'm not-low all the time
Supporting Member
DP Veteran
Joined
Jan 2, 2006
Messages
21,784
Reaction score
8,582
Location
Venice Beach, FL
Gender
Male
Political Leaning
Independent
My using Hamburger for Steak was for point and still holds true because while in separate categories it's still used to measure the overall inflation. If the weight given to steak vs hamburger is depended on assumption of usage due to price changes it skews the calculation of inflation. As Steak would be less of the weight then hamburger over a two year weighting period despite the fact Steak is widely bought by every household.

Well then, it also depends on what cuts of the cow you are defining as steak? People who are price sensitive to prime tenderloin are not likely to switch to hamburger meat because the price increases 20% per lb. This is not Hollywood; nobody goes in a restaurant and tells a server, "I'll have your steak."
 

austrianecon

DP Veteran
Joined
Dec 2, 2012
Messages
7,347
Reaction score
1,342
Gender
Undisclosed
Political Leaning
Libertarian
Well then, it also depends on what cuts of the cow you are defining as steak? People who are price sensitive to prime tenderloin are not likely to switch to hamburger meat because the price increases 20% per lb. This is not Hollywood; nobody goes in a restaurant and tells a server, "I'll have your steak."

Of course, which is why I argue for complying information (prices) from sales receipts over 3 months period and measure for each individual item bought. You can make it a basket of goods or not, doesn't matter.. but the purpose is not to change the weighting.
 

Kushinator

I'm not-low all the time
Supporting Member
DP Veteran
Joined
Jan 2, 2006
Messages
21,784
Reaction score
8,582
Location
Venice Beach, FL
Gender
Male
Political Leaning
Independent
Of course, which is why I argue for complying information (prices) from sales receipts over 3 months period and measure for each individual item bought. You can make it a basket of goods or not, doesn't matter.. but the purpose is not to change the weighting.

That makes no sense! The basket composition is never static. Tablets are being substituted for PC's for reasons other than price, as are other consumed products and services.
 

austrianecon

DP Veteran
Joined
Dec 2, 2012
Messages
7,347
Reaction score
1,342
Gender
Undisclosed
Political Leaning
Libertarian
That makes no sense! The basket composition is never static. Tablets are being substituted for PC's for reasons other than price, as are other consumed products and services.

It is for basic items. Tablets and PCs are not needed to live rather they are luxuries.
 

Kushinator

I'm not-low all the time
Supporting Member
DP Veteran
Joined
Jan 2, 2006
Messages
21,784
Reaction score
8,582
Location
Venice Beach, FL
Gender
Male
Political Leaning
Independent
It is for basic items. Tablets and PCs are not needed to live rather they are luxuries.

Come on man. Meat consumption has been steadily declining over the past 9 years. A static consumption pattern assumption is as bad as the rational economic man assumption. Or efficient price discovery (even though there are several non-competitive markets).

It should be noted that consumer electronics is one of the fastest growing portions of the consumer budget. Apple did not become the second biggest company (formerly no.1) in terms of market cap for nothing.
 

phattonez

Catholic
DP Veteran
Joined
Jun 3, 2009
Messages
30,870
Reaction score
4,244
Gender
Male
Political Leaning
Very Conservative
The Billion Prices Index:

US Daily Index » The Billion Prices Project @ MIT

"The Billion Prices Project is an academic initiative that uses prices collected from hundreds of online retailers around the world on a daily basis to conduct economic research.

This page shows our most recent research leveraging high-frequency price data, as well as the US daily inflation index (updated monthly on this page)."

You realize that the price of most goods are supposed to fall over time, right? A 1 TB HDD is cheap now compared to the boatload it would have cost 10 years ago. Maybe they figure this in their calculation, but it doesn't seem like it from what you presented.
 

phattonez

Catholic
DP Veteran
Joined
Jun 3, 2009
Messages
30,870
Reaction score
4,244
Gender
Male
Political Leaning
Very Conservative
Come on man. Meat consumption has been steadily declining over the past 9 years. A static consumption pattern assumption is as bad as the rational economic man assumption. Or efficient price discovery (even though there are several non-competitive markets).

It should be noted that consumer electronics is one of the fastest growing portions of the consumer budget. Apple did not become the second biggest company (formerly no.1) in terms of market cap for nothing.

Because it is getting more and more expensive.

Beef - Daily Price - Commodity Prices - Price Charts, Data, and News - IndexMundi
 

phattonez

Catholic
DP Veteran
Joined
Jun 3, 2009
Messages
30,870
Reaction score
4,244
Gender
Male
Political Leaning
Very Conservative
You will go to extreme lengths to push your agenda.

The vegetarian/vegan revolution is a byproduct of rising prices!!!!

The vegetarian/vegan revolution isn't causing a widespread decrease in meat consumption. Rising prices are far more likely.
 

Kushinator

I'm not-low all the time
Supporting Member
DP Veteran
Joined
Jan 2, 2006
Messages
21,784
Reaction score
8,582
Location
Venice Beach, FL
Gender
Male
Political Leaning
Independent
The vegetarian/vegan revolution isn't causing a widespread decrease in meat consumption.

Where is your support? Beef consumption has been in decline since 1976. Over the past 30 years, we have witnessed a dramatic increase in the consumption of chicken products (a beef substitute!) up until about 5 years ago.

Rising prices are far more likely.

Rrrright. People are buying more Boca Burgers because they are cheaper.... err, wait, they are not.
 

phattonez

Catholic
DP Veteran
Joined
Jun 3, 2009
Messages
30,870
Reaction score
4,244
Gender
Male
Political Leaning
Very Conservative
Where is your support? Beef consumption has been in decline since 1976. Over the past 30 years, we have witnessed a dramatic increase in the consumption of chicken products (a beef substitute!) up until about 5 years ago.

You realize that chicken is much cheaper than beef, right?

Rrrright. People are buying more Boca Burgers because they are cheaper.... err, wait, they are not.

I never denied a rise in vegetarianism, but I doubted that it was the cause for the fall in beef consumption.
 
Top Bottom