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Re: How do you think inflation works? [DavHamm] [ In reply to ]
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DavHamm wrote:
rich_m wrote:
i think some of it is communicating the message that they think their audience wants. An audience not ready or wanting to be told inflation is under control and prices are stable if they are stable at a level significantly higher than a year ago.


...which is probably the misunderstanding Windy's mate had about inflation.


Interesting that no one wants to talk about what basket of things are we talking about when we talk about inflation.

Most inflation baskets have little to do with what people spend their money on.

Do you really care what inflation of housing if you are not in the housing market, probably not. But if you eat lots of egg's you probably really care what their price is doing.. Not to many vegans care what the cost of beef is doing..

or about how changes in pricing of specific items in the basket impact the extent to which that item is purchased relative to the alternatives, and thereby contributes to actual inflation. For example if the price of beef increases by 25% but the price of alternatives stays the same then i would expect less beef to be consumed. How does that impact the inflation calculation? if the price of an item increases by so much that most people stop buying it and buy something else that has stayed the same price, then how can that price increase be contributing to inflation?

And the question remains. where were you.
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Re: How do you think inflation works? [rich_m] [ In reply to ]
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rich_m wrote:
DavHamm wrote:
rich_m wrote:
i think some of it is communicating the message that they think their audience wants. An audience not ready or wanting to be told inflation is under control and prices are stable if they are stable at a level significantly higher than a year ago.


...which is probably the misunderstanding Windy's mate had about inflation.


Interesting that no one wants to talk about what basket of things are we talking about when we talk about inflation.

Most inflation baskets have little to do with what people spend their money on.

Do you really care what inflation of housing if you are not in the housing market, probably not. But if you eat lots of egg's you probably really care what their price is doing.. Not to many vegans care what the cost of beef is doing..


or about how changes in pricing of specific items in the basket impact the extent to which that item is purchased relative to the alternatives, and thereby contributes to actual inflation. For example if the price of beef increases by 25% but the price of alternatives stays the same then i would expect less beef to be consumed. How does that impact the inflation calculation? if the price of an item increases by so much that most people stop buying it and buy something else that has stayed the same price, then how can that price increase be contributing to inflation?

From what I hear in some places Organic eggs are an example of what your talking about, as they are now cheaper than normal eggs.

In terms of what you hear, that option has no impact, as they have a fixed bag of goods. But most bags of goods, were established 20, 30 yrs ago. So not many streaming services in those bags of goods.

Just Triing
Triathlete since 9:56:39 AM EST Aug 20, 2006.
Be kind English is my 2nd language. My primary language is Dave it's a unique evolution of English.
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Re: How do you think inflation works? [rich_m] [ In reply to ]
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The headline number is used because it accounts for seasonal variations. It is an important indicator. It shouldn’t be the only indicator, but month to month is too volatile. But if you listen to Fed officials they are well aware than the 3 and 6 month trends are well below the headline and are planning the next moves with that into account.
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