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Thread: Inflation on the rise? Market says not so much

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    Re: Inflation on the rise? Market says not so much

    Quote Originally Posted by AdamT View Post
    The 2012 Corvette is a much better car than the 2002 Corvette. It's not a very good gauge.
    You have to work in comparisons. I mean, the 1984 corvette is a much better car than a 1982 corvette, even though the price is not that much different. You have to compare to other cars, how good it is for the times.

    In other words, in 2002, a base corvette was comparable, in performance, to a Porsche Carrerra. Z06 to a 911. The same holds true today. By your rationale, a 1960s vette should have cost next to nothing, because of how great a new vette is. Yet, a high end, top of the live model cost 1/4 of the average house cost, for the time period. Because it was, for the day, a world beating supercar. Not too much out there that could hang with an L88 vette. But it only cost, what, 4-6 grand, or something like that? By your logic, it must have been a crap car....not the barely road legal, race ready, super car that could out do even most new sports cars of today, right?
    Quote Originally Posted by calamity View Post
    Reports indicate that everyone knew he was hauling a bunch of guns up there. But, since you brought it up, there's something which should be illegal: guns that breakdown.

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    Re: Inflation on the rise? Market says not so much

    Quote Originally Posted by AdamT View Post
    Because it's a much better car. And on top of that, even with stated inflation 40,000 in 2002 would be equivalent to 48,186 in 2010 (not 2012). The Inflation Calculator

    Do you know what compound interest is?
    Which makes my means of calculating inflation pretty freaking accurate, wouldn't you agree?
    Quote Originally Posted by calamity View Post
    Reports indicate that everyone knew he was hauling a bunch of guns up there. But, since you brought it up, there's something which should be illegal: guns that breakdown.

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    Re: Inflation on the rise? Market says not so much

    Quote Originally Posted by KevinKohler View Post
    You have to work in comparisons. I mean, the 1984 corvette is a much better car than a 1982 corvette, even though the price is not that much different. You have to compare to other cars, how good it is for the times.

    In other words, in 2002, a base corvette was comparable, in performance, to a Porsche Carrerra. Z06 to a 911. The same holds true today. By your rationale, a 1960s vette should have cost next to nothing, because of how great a new vette is. Yet, a high end, top of the live model cost 1/4 of the average house cost, for the time period. Because it was, for the day, a world beating supercar. Not too much out there that could hang with an L88 vette. But it only cost, what, 4-6 grand, or something like that? By your logic, it must have been a crap car....not the barely road legal, race ready, super car that could out do even most new sports cars of today, right?
    I think that the Corvette is a higher end car today than it was in 2002, relative to other sports cars. But in any case, as I mentioned, a $10k price increase does not support the argument that inflation has been understated. A $10k increase is right in line with what you expect based on published inflation numbers.
    "The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. ... It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion."

    -- Adam Smith

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    Re: Inflation on the rise? Market says not so much

    Quote Originally Posted by RabidAlpaca View Post
    I disagree. It directly benefits the rich, and directly disadvantages the poor. The rich own hard assets, which appreciate in value with inflation. When helicopter Ben hands out cash at one of his giveaways, it's always to the hands of the mega rich.

    There's something inherently wrong with a system where the government puts a gun to my head to take a portion of my money, so that they may loan to banks at a .1% rate, so that banks may loan to me at a 3% rate.
    The rich do own hard assets, but they also tend to have much more in cash more near cash type investments than the poor do. The poor don't have any money to deflate, thats why they are poor.

    Wages tend to increase at about the same rate that inflation does. During high inflationary times, like the early '80's, wages increase much faster than during low inflationary times, like today.

    The only two groups of people who are significantly harmed by inflation are people and businesses that lend their own money, or fail to invest their money into hard assets . Thats part of the rationel of targeting a three percent inflation rate. It tends to motivate people into either spending their money now, creating demand, or investing their money productively, creating capital for production expansion. Put the two together, increasing demand and increasing business investment - and ya got a forumula for a good economy.

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    Re: Inflation on the rise? Market says not so much

    Quote Originally Posted by KevinKohler View Post
    Which makes my means of calculating inflation pretty freaking accurate, wouldn't you agree?
    Well, it worked out pretty well in this case, but I think you were trying to argue that inflation is really worse than we've been led to believe, and your argument fails by your own calculation.
    "The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. ... It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion."

    -- Adam Smith

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    Re: Inflation on the rise? Market says not so much

    Quote Originally Posted by Voltaire X View Post
    3% inflation is terrible

    2% inflation (what we've been hovering around the last few years) cuts the purchasing power of the dollar in half every 30 years.. So $100 now would buy what you could currently buy with $50 in 2042. That's pretty rough.
    Not if you invest your money wisely.

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    Re: Inflation on the rise? Market says not so much

    Quote Originally Posted by AdamT View Post
    Well, it worked out pretty well in this case, but I think you were trying to argue that inflation is really worse than we've been led to believe, and your argument fails by your own calculation.
    Eh, no fail. I don't believe inflation is worse than anyone is led to believe. I think people (like yourself) are trying to convince me that a relative 10K value drop in purchasing power of the USD is not such a bad thing, over a period of ten years.

    I politely disagree. i think that ANY reduction in the purchasing power of the dollars that I earn and then SAVE is a bad thing. It's a tax on the money I keep in the bank, money that is SUPPOSED to be safe. And like ALL taxes, it's designed to incentivise certain behaviors...in this case, spending. Can't lose money to inflation if I don't hang on to it for long periods, can I?

    Which is the problem with this freaking country. No one thinks about tomorrow, and no one understands the difference between SAVING and GAMBLING.
    Quote Originally Posted by calamity View Post
    Reports indicate that everyone knew he was hauling a bunch of guns up there. But, since you brought it up, there's something which should be illegal: guns that breakdown.

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    Re: Inflation on the rise? Market says not so much

    Quote Originally Posted by imagep View Post
    Not if you invest your money wisely.
    And simply keeping my money in the bank is unwise?


    Do you realize how that sounds?
    Quote Originally Posted by calamity View Post
    Reports indicate that everyone knew he was hauling a bunch of guns up there. But, since you brought it up, there's something which should be illegal: guns that breakdown.

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    Re: Inflation on the rise? Market says not so much

    Quote Originally Posted by Kandahar View Post
    Are you aware of how Paul Volcker finally broke the back of inflation? It was by raising interest rates, which led to an intentional-but-necessary recession from 1980-1982. Just because unemployment and inflation are sometimes both high or both low doesn't mean that they aren't inversely related; the late 70s is a perfect example of dialing up unemployment in order to dial down inflation. In our present situation, we have the opportunity to dial up inflation in order to dial down unemployment. Hopefully the Fed makes good on their promise to do so.
    That is correct, of course it was a huge mistake to do so. Our inflation was being mostly caused by a force external to the American economy - OPEC and an artificially manufactured oil shortage that drove up the price of oil five fold:



    That would be like oil going from $92 a barrel now, to $500 a barrel in less than two years. It would be quite inflationary - on everything.

    We should never sacrifice our productivity or jobs to control externally produced inflation. It was stupid then, and it would be stupid today.
    Last edited by imagep; 10-02-12 at 12:24 AM.

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    Re: Inflation on the rise? Market says not so much

    Quote Originally Posted by KevinKohler View Post
    Eh, no fail. I don't believe inflation is worse than anyone is led to believe. I think people (like yourself) are trying to convince me that a relative 10K value drop in purchasing power of the USD is not such a bad thing, over a period of ten years.

    I politely disagree. i think that ANY reduction in the purchasing power of the dollars that I earn and then SAVE is a bad thing. It's a tax on the money I keep in the bank, money that is SUPPOSED to be safe. And like ALL taxes, it's designed to incentivise certain behaviors...in this case, spending. Can't lose money to inflation if I don't hang on to it for long periods, can I?

    Which is the problem with this freaking country. No one thinks about tomorrow, and no one understands the difference between SAVING and GAMBLING.
    Mild inflation is certainly better than deflation, and because it's unlrealistic to expect 0% inflation, mild inflation is generally what we target. As a rule salaries tend to track inflation as long as it isn't unusually high.

    If you were really thinking about the future you would invest your money and not stick it in a bank earning essentially zero interest.
    "The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. ... It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion."

    -- Adam Smith

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