Yep, unfortunately Sig doesn't live in the real world...The "official numbers" can't be wrong, we must all be conspiracy kooks since we can't see all of that deflation all around us.
I agree. People, or traders, always watch those events...like its the Superbowl or something -- makes little to no difference to their profits/loss statement anyways.
I said I'd come back when I figured out a way to make money of this crowds ability to completely convince themselves that the official inflation numbers are wrong without being able to provide a single number to back up their point. So, I'd like to propose a bilateral forward contract. These are not regulated, unlike futures contracts. It will work this way. On Oct 1st, my counterparty(s) goes to three of their local supermarkets and takes pictures of the prices of a basket of 10 staple foods. We'll say milk, sugar, flour, potatoes, beans, rice, eggs, butter, cheese, and vegetable oil. You send me the pictures of those prices. I'll do the same (I live in a medium size east coast suburban area, and yes, my wife and I alternate weeks to do grocery shopping for our family that is decidedly not in the top 1% of wage earners). Exactly one year later we go to the same stores and take pictures of the prices for those exact same items, same brand, size, etc. All pictures get posted here. We compare the percentage change in prices to the unadjusted percentage change in prices for those commodity classes at http://www.bls.gov/cpi/cpid1508.pdf If the average actual prices you and I photographed increased at a rate 5% greater or more than the official CPI rate for those classes, I pay you $1,000 and make a post that the evidence has forced me to believe the official CPI numbers are a conspiracy and I'll never defend them here again. Anything else, you pay me $1,000, and post here that the evidence has forced you to believe the official CPI numbers are not a conspiracy and you'll never post unsubstantiated assertions that official numbers are lies because you say they are here again. I'm happy to put a contract together for anyone who's willing to put their money where their mouth is. Several posters have claimed rampant inflation in staple goods and are just certain the federal government is fabricating inflation numbers in a significant way. If you're sure the federal government is lying and understating inflation by a significant amount, this is free money for you. I want to be clear that at this point I'm simply trying to debunk the persistent, completely irrational insistence by the conspiracy theorists that the official CPI numbers are completely faked, nothing else. I've asked for just a shred of quantitative evidence that this is the case and all I got back was the assertion that 1 percenters are hoarding 5 pound sacks of sugar! It doesn't get more "real world" than pictures in your local supermarket, are you up for it der_kommissar, eurusdzn, k p, spacewiz, Tsing Tao?
I really do applaud your desire to get at the facts, and in so many of these discussions here at ET, facts are clearly missing. But I honestly don't think this would prove anything. For one thing, there could be huge variances based on many factors. Doesn't the US right now have a major issue with eggs because of some chicken virus going around? I have even read stories that food producers are substituting eggs in their recipes to eliminate the need for eggs given that they are so expensive. This is of course just one example, but I can't image there are many more. What I also see happening is a race to the bottom. Some things are getting cheaper, Walmart especially keeps squeezing producers, and although you might get your toilet paper 10 cents cheaper a year from now, many will have wages suffer, job losses, and none of this will balance out the fact that maybe you're saving a dollar a month on toilet paper. On top of this, I really don't think food price increase is the greatest threat. Housing is by far the biggest expense, and as I outlined, even if house prices drop, some home owners are hurt, but this never translates to cheaper rates for poor people who rent. Basically, going forward, I think everyone will be hurt. When looking at official numbers, I think you also have to look at jobs and wages as this is perhaps even more important than inflation. Although the employment seems low, the hours worked per week I think was dropping because of Obamacare, and also the wage increases have been pathetic. Even if you say food hasn't increased at all, housing has, wages haven't gone anywhere, hours of work have dropped, and perhaps even those looking for work has dropped so the official unemployed numbers could just be people looking for work. Lets also not forget the other important metric that most of the top 10% have gotten much richer, and everyone else has suffered. This is something that cannot be ignored. All the money pumped into the system hasn't gone to anyone but the guys at the top.
Ps. I see so much of this happening. Every single juice container used to 1.89 L but now they are all 1.75 L, even though the boxes are the same size. http://forums.redflagdeals.com/tropicana-packaging-change-887726/ EDIT: Oh... and where i live, Canada, many people pay over 50% of their income on housing, and yet, housing isn't in the CPI data.. correct? I wonder why one of the most important expenses isn't tracked for increases... hmmmmm (yes, I know the answer/excuses will be something like its too geographical, and too dependent on people's personal preference, etc.)
Hehe, I really admire your passion about this. Couple of questions: 1) Why 5%, I thought the official figures state the inflation is at or below 2%? Do I sense admission that the inflation is actually higher than the officially stated numbers? 2) There is a flow in your proposed scheme - price snapshots taken on 1 day a year do not account for price fluctuations due to seasonality, temporary supply disruptions, etc.. To make inflation estimate more accurate you would need to make price snapshots regularly, say once a week for 2 years... 3) What about other expense categories where prices have been skyrocketing over the past few years such as: housing, medical insurance, education, etc
Just to clarify, a 5% error would be actual inflation of a commodity measured at 1.05% when the official number was 1%. I know, percent of a percent is a bit confusing, sorry for not clarifying that initially. If you're convinced all the government is lying about the data in the CPI, then you must be thinking inflation is significantly higher than 1.05% when they say its 1%, otherwise you have nothing to be so apoplectic about. Let's be clear here, comprehensive, item by item measurement of prices across everything from food to transportation to clothes to rent to medical care taken on a regular basis is the best way to measure inflation. I completely agree. And what do you know; those are exactly the categories, plus a bunch more, that make up the CPI, broken down into even smaller subcategories, measured around the country on a consistent basis throughout the year. It's the conspiracy theorists here who have said the CPI measure is all wrong, because.... milk, and 4 lb bags or sugar, and that I'm "not living in the real world", or I'm a 1 percenter, or I'm a fed plant or politician because I believe these rigorous measurements to be generally accurate. So I offer to take you up on your conspiracy theory and show that even your anecdotal worldview doesn't hold up to actual rigorous measurement. Or in your eyes, give you a free $1,000. Why aren't you all jumping on this found money? Could it be that once you learn a little about the CPI it turns out to be a reasonable way to measure inflation and you're afraid that your anecdotal "evidence" may be colored by a little selective memory? Come on guys, I was waiting to jump back on this post until I found a way to make money off your intransigence, and I thought I'd figured out a way since you were all so certain that the official inflation numbers were a big lie, but now you're all refusing to put your money where your mouth is. I'm really disappointed.
Jesus man just go look up "problems with CPI" on Google rather than having everyone take part in some ridiculous mechanical turk project to collect a bunch of grocery prices in a hugely error-prone fashion. The fact of the matter is that if everything lined up like you expect it should we wouldn't be sitting here at year 7 of ZIRP. It is clearly obvious to any rational critical thinker that something seriously stinks here and only the "everything is great!" crowd keeps buying the bullshit. 2005-2007 comes to mind.
Oh brother. Tell all that to a 75year old living on fixed income. You are young arent you? Absolutely no perspective or real world experience . But, i am sure you can gather government statistics on life in decades past. Wake up.