Comments on: An Austrian makes the bear case on gold. http://sovereignspeculator.com/2008/10/30/an-austrian-makes-the-bear-case-on-gold/ Thoughts on the markets and the decline of the west Sun, 28 Nov 2010 09:46:13 +0000 http://wordpress.org/?v=2.6 By: Mike http://sovereignspeculator.com/2008/10/30/an-austrian-makes-the-bear-case-on-gold/#comment-717 Mike Thu, 30 Oct 2008 19:13:11 +0000 http://sovereignspeculator.com/?p=2153#comment-717 Yes, substitutions and technology advances screw up CPI in all manner of ways. Its methods and inconsistencies could be fixed by any schmuck who's passed a statistics course, but politics preclude such honesty. Shadowstats.com has CPI using the old pre-Clinton methods (as well as more realistic unemployment and GDP data). At any rate, neither CPI nor any other measure of prices should be thought of as 'inflation' itself (which is better thought of as a net expansion of money and credit), but as a crude and trailing indication of inflation's effects. Yes, substitutions and technology advances screw up CPI in all manner of ways. Its methods and inconsistencies could be fixed by any schmuck who’s passed a statistics course, but politics preclude such honesty.

Shadowstats.com has CPI using the old pre-Clinton methods (as well as more realistic unemployment and GDP data).

At any rate, neither CPI nor any other measure of prices should be thought of as ‘inflation’ itself (which is better thought of as a net expansion of money and credit), but as a crude and trailing indication of inflation’s effects.

]]> By: Mark http://sovereignspeculator.com/2008/10/30/an-austrian-makes-the-bear-case-on-gold/#comment-715 Mark Thu, 30 Oct 2008 17:01:04 +0000 http://sovereignspeculator.com/?p=2153#comment-715 Regarding the price differences between 1967 and now for that sample of groceries: I don't know but shouldn't increases in productivity and substitutions of cheaper ingredients be factored in? If they're making the jam with corn syrup instead of sugar, then they're not comparing the same things. And if they've found a way to further automate the jam-manufacturing process so that it's cheaper to make jam, then wouldn't the rate of inflation also be understated for that reason? Regarding the price differences between 1967 and now for that sample of groceries: I don’t know but shouldn’t increases in productivity and substitutions of cheaper ingredients be factored in? If they’re making the jam with corn syrup instead of sugar, then they’re not comparing the same things. And if they’ve found a way to further automate the jam-manufacturing process so that it’s cheaper to make jam, then wouldn’t the rate of inflation also be understated for that reason?

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