Prime Rate 1981: 20.5% 2009: 3.25% (Current) Inflation 1980: 14.8% 2008: 0% (December) 30-Year Mortgage Rate 1981: 18.5% 2009: 4.96% (Current) Real Gas Price (2008 dollars) 1981: $3.45 per gallon 2009: $1.82 (Current)
so safe to say 78 was an aberration in the statistics? all other years looks like the correlation is there.
In about 1980 they changed to the "hedonics" where if something became expensive, they exclude it and substitute something else. They also changed the unemployment percentage calculation about the same time. The problem was the "misery index", and to fix it they changed how things are calculated to make things look better. Its been done that way since, enabling them to reduce Social security increases by 50% since then as a result. See shadowstats.com for the numbers compared.
I wasn't trying to come to any conclusion. Inflation By Month as calculated from the CPI at inflationdata.com 1980 JAN 13.91% FEB 14.18% MAR 14.76% APR 14.73% MAY 14.41% JUN 14.38% JUL 13.13% AUG 12.87% SEP 12.60% OCT 12.77% NOV 12.65% DEC 12.52% AVERAGE 1980 - 13.58%
I don't know the exact point in time the government changed how inflation was calculated, but those numbers look honest to me for 1980. The problem is that all the numbers SINCE the change have been lowball lies. If you look at the chart at shadowstats http://www.shadowstats.com/alternate_data/inflation-charts you will see how the new calculations reduced what the government REPORTS as inflation starting in late 82 or early 83 from the looks of it. What I'm saying is that what we are looking at since is a systematic misreporting used by the government to make the numbers look better and to reduce payments to Social Security recipients.
Very true, I really find it impossible to believe, especially since I was sitting in an Economics class in college in 1980 while we went thru that time, that with the US dollar making the move that it has in the last 9 months we have near zero or low single digit inflation. EUR/USD Mar '09 ~1.25 Dec '09 ~1.50
The european companies have been sacrificing profits and "eating" the cost differential to keep their plants alive because they can't easily just lay people off or fire them like here in the US. Healthcare is up another 15% here, this year. Fuel costs, too. Food hasn't risen. It went way up and back down much of the increase, I think. But we all know inflation wasn't zero. Its just the government cheating on the numbers to make them look better.
I wouldn't look at the EUR as an indicator of imported inflation. The biggest exporters to the US are Canada, Mexico and China. The EURUSD could goto 2.00 tomorrow (all else equal) and it wouldn't have much impact on US inflation.
Ask both persons 20 years later who bought a basket of stock representing the S&P 500 and a person who bought gold the year that article was published. Who do you think did better. (gold does not pay dividends either)