[ExI] Inflation graph

spike spike66 at att.net
Mon Oct 28 16:48:11 UTC 2013



From: extropy-chat-bounces at lists.extropy.org
[mailto:extropy-chat-bounces at lists.extropy.org] On Behalf Of John Clark
Sent: Monday, October 28, 2013 9:07 AM
To: ExI chat list
Subject: Re: [ExI] Inflation graph


On Sun, Oct 27, 2013  spike <spike66 at att.net> wrote:


> The comment itself presupposes that inflation is some kind of fiat number
somehow dictated by some central power somewhere.  [...]   If reduced to one
number, it does throw away some important subtleties.  


Spike, if the graph
were inverted and thus supported your economic theories would you still be
saying that inflation can't be quantified and making other excuses? etc.
John K Clark



John, what I am saying is that these inflation numbers depend on what it is
you are buying.  Prices for electronics and most manufactured goods have
been falling for years, while fuel and food have been going up smartly.  So
inflation is different for everyone.  The overall number is an average of
sorts, rather arbitrarily derived.  For instance, should it include gold?  I
haven't bought any of that, don't plan to.  Should it exclude food and fuel,
when for many poorer people nearly all their available money goes for those
two things?  Should it be weighted somehow?


Consider the Zimbabwe example.  Even during their exponential inflation, the
price of some things actually went down, such as the price of cars.  Their
only value in most cases depended only on how much fuel was in the tank.  A
typical vehicle only had value if enough fuel could be scraped together to
drive the thing to the southern border and sold for scrap.  Even the spare
parts were nearly worthless.  Some of the raw materials, such as tires,
could be cut up to make sandals.  But food?  Forget it, their currency
couldn't really buy that.


Fortunately for me, my family are all vegetarians and light eaters, and we
are well situated so we need not drive all that far.  The climate is mild
enough to seldom need any sincere attempts at HVAC.  So food and fuel costs
don't hit me very hard.


So inflation is arbitrary, and depends on what the consumer buys.  A number
is derived arbitrarily to let the government decide how it will adjust its
pensioners for cost of living, but if you have some foresight when you
retire, your costs can actually decline even in inflationary times.  Housing
around here is going up like crazy as foreign money is coming in and
snapping up the available homes.  But I am not buying; I already own one.  


Inflation all depends on what you buy.




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