PeakTrader.com

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PeakTrader said...

Perhaps, food inflation is a function of buying more and better food, from lower interest rates, the payroll tax cut, paying-off or defaulting on debt, etc.

Some people will actually pay $96 for a $40 prime rib roast.

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Also, because of higher gasoline prices, fewer people may shop at several stores or more often to take advantage of bargains.

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Morganovich says: "right now, $15/lb for aged prime rib is a STEAL."

Sounds like deflation.

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Morganovich says: "you can always cherry pick a few items."

That's one reason why some shoppers have zero inflation, while others have 8% inflation.

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Morganovich, how does the quality of the coffee fall when the same coffee goes on sale at about 50% off?

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Columbia Missouri seems to have a good meat market:

Mizzou Meat Market

All beef is aged at least 18 days and predominately "Choice" grade

Porterhouse Steak
$7.44 per pound

T-Bone Steak
$6.99 per pound

Ribeye Steak
$7.44 per pound

Satisfy your inner carnivore by picking up USDA approved, prime cuts of beef, pork and lamb from Mizzou Meat Market.

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Morganovich says: "what you are trying to duck is this: you used to buy a choice ribeye. the price rose, so you switched to a select sirloin."

There are many items I wouldn't buy at any price.

What I'm saying is the volatility in hundreds of food prices can result in little or no food inflation and with no significant changes in quantity or quality.

That's not true with gasoline, for example.

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Morganovich says: "that mizzou meat market is such a cherry pick is unreal."

Well, isn't that what you want to "cherry pick" if you live in that city?

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Bart, are you saying all food rose over 4% in a linear line?

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Morganovich, the Fed also chased imaginary inflation in 2007 and it resulted in a recession.

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At least Bernanke proved he's not an "inflation dove."

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Morganovich, we had a (temporary) oil shock.

The Fed maintained a restrictive stance through 2007 and later (fortunately, the Bush tax cut in early 2008 gave the Fed time to catch-up).

Inflation remains overstated, because net quality adjustments have been too little and too late.

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Morganovich, you seem to believe the global economic boom had nothing to do with higher oil prices, and U.S. trade deficits reaching $800 billion a year, or 6% of GDP, had nothing to do with the depreciation of the dollar.

The Fed doesn't control where money flows, whether it's into a U.S. market, foreigners, or the U.S. government.

It attempts to maintain sustainable U.S. macroeconomic growth through price stability using the money supply.

Also, the BLS takes a conservative approach in quality adjustments. Unless you believe quality has deteriorated more than improved, then inflation may be understated.

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Moreover, I give the Fed credit for easing the money supply while oil prices continued to rise, although it should've began the easing cycle sooner, e.g. early 2007, because of lags in the adjustment process.

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Morganovich, what if 10 people need airline tickets right away and pay $300 each, while 90 people are able to buy them on sale at $100 each?

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Morganovich, however, if you tell the 90% that the airline ticket is $120, they'll tell you it's $100.

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Morganovich, it "demonstrates" I'm supporting my statement above:

"...some shoppers have zero inflation, while others have 8% inflation."

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Ron, do you see a contradiction in those two statements about the Fed?

The Fed works in the future economy, because of lags in the adjustment process.

Does that make the Fed incompetent?

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The chart shows the CPI less food and energy is much less volatile than the all items CPI:

http://data.bls.gov/pdq/SurveyOutputServlet?request_action=wh&graph_name=CU_cpibrief

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Ron, I don't know why the Fed doesn't inspire confidence in you.

It takes a great deal of ability to anticipate the future economy correctly and smooth-out business cycles successfully.

I guess, some people are easily duped into believing it's the Fed's fault.

I never said the Fed "drove the economy into a ditch."

The Fed was somewhat behind the curve easing the money supply in 2007.

Nonetheless, the country was on the path to a mild recession, until Lehman failed in Sep '08.

The financial crisis wasn't the result of monetary policy, it was the result of policies by politicians.

The Fed is in a tough position. It has to facilitate economic growth and maintain price stability, while politicians tend to reduce growth and create inflation.

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Bart says: "...attempts to muddy the waters with strange phrases like "in a linear line"."

More than two dimensions are too much for some.

Perhaps, Americans are buying higher quality food, because of higher income?

So, what's really the food inflation rate?

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Ron, your only statement I agree with is: "There's evidence all around you."

Let me know when you find some.

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The economic literature clearly shows monetary policy has been effective in smoothing-out business cycles.

U.S. living standards improved at a faster rate, since the Great Depression, in large part, because of the Fed smoothing-out business cycles, to keep resources more employed.

The Fed has done its part to maximize economic growth and maintain price stability in this 21st century-style depression.

Now, it's up to the government to deregulate, cut spending, and cut taxes to unshackle the potential of the greatest economy the world has ever seen.

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PeakTrader said...

Economists differ on value judgments.

However, there are false prophets, with little or no economics expertise, who make a conclusion first (e.g. manufacturing is declining, inflation is high, the Fed is bad, etc.), pick a few pieces of the economics puzzle, fill in the gaps with false assumptions, and declare the picture they created is correct.

And no matter how much proof you show them it's not correct, they'll continue to defend it, perhaps just because they created it. Therefore, it has to be correct.

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