Skip to main content

View Diary: BREAKING: Cyprus Might Take 25% of Savings Now (197 comments)

Comment Preferences

  •  Well, strictly speaking, we have other ways (20+ / 0-)

    of committing theft against our savers.  Near-zero interest rates while inflation remains real and fraudulently underreported, for one thing -- "monetizing the debt" on the backs of the "little people."

    And unlike Cyprus, we can invent money out of nothing, which may just bring us back to inflation.  Fortunately (and I say this with bitter irony), the nature of just such a practice, lately euphemized as "quantitative easing," doesn't raise the risk of inflation because the money is never circulated to real people for use.

    Dogs from the street can have all the desirable qualities that one could want from pet dogs. Most adopted stray dogs are usually humble and exceptionally faithful to their owners as if they are grateful for this kindness. -- H.M. Bhumibol Adulyadej

    by corvo on Sat Mar 23, 2013 at 08:17:05 AM PDT

    •  Then there are the insedious (sp??) bank fees (8+ / 0-)

      lots of them are charging.  Things like min balance fee, atm use (or not use), withdrawal fee, balance checking fee, and any other thing I can't think of right now fee.

    •  Near zero interest is killing the retired ppl (6+ / 0-)

      As principle will have to be used to pay real estate taxes, forcing them out of their homes.

      The American Dream, yeah, right

      It's difficult to be happy knowing so many suffer. We must unite.

      by War on Error on Sat Mar 23, 2013 at 08:23:10 AM PDT

      [ Parent ]

    •  oh please, inflation is not fraudulently reported (8+ / 0-)

      if it were the market would pay more than 2% on a 10-yr Treasury as inflation expectations would be factored in the pricing.

      Financial crashes like 1929 and 2008 typically foster years of deflationary forces but Ben has walked the tightrope of prices and investment activity pretty damn well so far.

      And who is the biggest beneficiary of ZIRP?  Homebuyers and the 2.2 million refis that save $4300/yr from Obma's HARP program.

      "The way to see by faith is to shut the eye of reason." - Thomas Paine

      by shrike on Sat Mar 23, 2013 at 08:30:25 AM PDT

      [ Parent ]

      •  Eliminate from the calculation (9+ / 0-)

        of the inflation rate everything the price of which tends to inflate; reduce steak to hamburger (etc.) . . . and poof! no inflation.

        The price of catamarans, on the other hand, seems to be remaining fairly constant.

        Dogs from the street can have all the desirable qualities that one could want from pet dogs. Most adopted stray dogs are usually humble and exceptionally faithful to their owners as if they are grateful for this kindness. -- H.M. Bhumibol Adulyadej

        by corvo on Sat Mar 23, 2013 at 08:33:20 AM PDT

        [ Parent ]

        •  Which the BLS never did, (5+ / 0-)

          as they explained publicly. The only thing they assume is that people will substitute between different providers of the same good: If, for example, Walmart raises the price of beefsteak by 10% and, say, Costco by 5%, the methodology assumes people will shift to Costco beefsteak. In short, it assumes intra-, not inter-category substitution in a given area.

          Iuris praecepta sunt haec: Honeste vivere, alterum non laedere, suum cuique tribuere. - Ulpian, Digestae 1, 3

          by Dauphin on Sat Mar 23, 2013 at 08:40:39 AM PDT

          [ Parent ]

          •  A really smart calculation (2+ / 0-)
            Recommended by:
            wilderness voice, Mr Robert

            for those with the time and means to comparison-shop.

            Dogs from the street can have all the desirable qualities that one could want from pet dogs. Most adopted stray dogs are usually humble and exceptionally faithful to their owners as if they are grateful for this kindness. -- H.M. Bhumibol Adulyadej

            by corvo on Sat Mar 23, 2013 at 09:10:59 AM PDT

            [ Parent ]

            •  Still, quite different from what you've written. (1+ / 0-)
              Recommended by:
              virginislandsguy

              That said, the differences are quite minor. If I remember the BLS' statement correctly, they still measure inflation using the old methodology as well, and the difference is on average something like 0.2%

              Iuris praecepta sunt haec: Honeste vivere, alterum non laedere, suum cuique tribuere. - Ulpian, Digestae 1, 3

              by Dauphin on Sat Mar 23, 2013 at 09:12:24 AM PDT

              [ Parent ]

          •  Corvo is correct. The BLS changed the method (6+ / 0-)

            of calculating inflation during the Clinton administration. The true inflation is hidden when people replace more expensive items with cheaper ones. If people suddenly stopped buying shoes and underwear and started eating cheap cat food the inflation rate would go down dramatically.

            Why Reported Inflation Seems Different Than Reality
            ...
            Shortly after Clinton entered the White House the Bureau of Labor Statistics (BLS) altered the calculation of inflation by changing the weighting of goods in the CPI fixed basket.  Then, over subsequent years, the method of weighting the underlying components was changed from a straight arithmetic weighting method to geometric.  The primary result of the switch to a geometric weighting was a lower weighting to CPI components that were rising in price, and a higher weighting to those items dropping in price which led to lower reported inflation.
            ...
            The obvious problem with these manipulations is it changed the measure of inflation from a cost-of-living adjustment to a reduction-of-living adjustment.  The original CPI calculation allowed individuals to understand the rate of return required on investments and incomes to maintain their current standard of living.  However, by artificially suppressing the rate of inflation, the future standard of living is reduced to lower levels.
            ...
            •  No, he isn't. Not to the extent he claims. (2+ / 0-)
              Recommended by:
              cynndara, virginislandsguy

              From the BLS' website:

              When the cost of food rises, does the CPI assume that consumers switch to less desired foods, such as substituting hamburger for steak?

              No. In January 1999, the BLS began using a geometric mean formula in the CPI that reflects the fact that consumers shift their purchases toward products that have fallen in relative price. Some critics charge that by reflecting consumer substitution the BLS is subtracting from the CPI a certain amount of inflation that consumers can "live with" by reducing their standard of living. This is incorrect: the CPI's objective is to calculate the change in the amount consumers need to spend to maintain a constant level of satisfaction.

              Specifically, in constructing the "headline" CPI-U and CPI-W, the BLS is not assuming that consumers substitute hamburgers for steak. Substitution is only assumed to occur within basic CPI index categories, such as among types of ground beef in Chicago. Hamburger and steak are in different CPI item categories, so no substitution between them is built into the CPI-U or CPI-W.

               Furthermore, the CPI doesn't implicitly assume that consumers always substitute toward the less desirable good. Within the beef steaks item category, for example, the assumption is that consumers on average would move up from flank steak to filet mignon if the price of flank steak rose by a greater amount (or fell by less) than filet mignon prices. If both types of beef steak rose in price by the same amount, the geometric mean would assume no substitution.

               In using the geometric mean the BLS is following a recognized best practice for statistical agencies. The formula is widely used by statistical agencies around the world and is recommended by, for example, the International Monetary Fund and the Statistical Office of the European Communities.

              [snip]

              Neither belief is supported by evidence. BLS calculations have shown that the geometric mean formula has reduced the annual growth rate of the CPI by less than 0.3 percentage points. Hedonic quality adjustments for shelter regularly increase the rate of change of the CPI, and those for apparel have had both upward and downward impacts at different points in time and for different types of clothing. The BLS estimates that the overall impact of hedonic quality adjustments in use in other categories has been extremely small. Furthermore, if the CPI were using the pre-1983 asset-based method instead of rental equivalence to measure homeowner shelter cost it would yield a sharply lower current measure of shelter inflation, given that house prices are now declining in many parts of the country.

              http://www.bls.gov/...

              Iuris praecepta sunt haec: Honeste vivere, alterum non laedere, suum cuique tribuere. - Ulpian, Digestae 1, 3

              by Dauphin on Sat Mar 23, 2013 at 09:38:20 AM PDT

              [ Parent ]

              •  The BLS site is misleading (6+ / 0-)
                Furthermore, the CPI doesn't implicitly assume that consumers always substitute toward the less desirable good. Within the beef steaks item category, for example, the assumption is that consumers on average would move up from flank steak to filet mignon if the price of flank steak rose by a greater amount (or fell by less) than filet mignon prices. If both types of beef steak rose in price by the same amount, the geometric mean would assume no substitution.
                That's nonsense. All steak is not equal. Very few steak consumers could substitute flank (or chuck) steak for filet mignon (or porterhouse) and still "maintain a constant level of satisfaction". Our family has reduced the purchase of the higher quality meats and replaced them with hamburger and sausage. Standing rib roasts are now purchased very rarely and only for very special occasions. At one time, they were a Sunday dinner regular. It's been replaced with meatloaf, not a chuck roast.
      •  So the inflation statistics (4+ / 0-)
        Recommended by:
        War on Error, jabney, k9disc, corvo

        accurately include the inflation of rents, housing prices, and so on?

        "Always in motion is the future." -Yoda

        by Cassiodorus on Sat Mar 23, 2013 at 08:37:54 AM PDT

        [ Parent ]

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site