Inflation

[chardog]

I stand corrected. Long term bond yields react in no way to inflation expectations. Furthermore, our productivity today is no better than it was in the 1970's despite any technological advances you may have heard of in the past 30 years. Lastly, per squiffy's examples, I admit that our economy obviously is as dependent on energy prices now as it was before the PC was invented. In fact, I'm thinking about quiting my current employment and looking for a manufacturing job.

And to the original poster, yes, despite a 100%+ rise in oil prices, completely tame inflation, and a cyclical bull market only a few percent off its recovery high... I would recommend moving all of your assets into gold.

See you at S&P 1300 goldbugs...

[Il_Mostro]

I'm not an economist, and most especially not a US one, but I found the following article interesting. Puplava is dissecting the CPI and basically, to his mind, showing that it's just a bogus concept.

The article is long, I'll only paste the introduction below
The Core Rate
[ QUOTE ]
A caller into a Washington D.C. talk show asked a very pertinent question regarding the business of living. “Have they changed the way they measure the rate of inflation? The CPI report in May was zero percent, excluding food and energy. If you take those things out, that is what is primarily driving up everything. What would be the real inflation rate, if you add back everything they take out?" The host of the show turned to his guest, a financial reporter from The New York Times. The host of the show and the Times reporter were caught flatfooted. The Times reporter couldn’t answer the question. The host then went on to say, "The inflation rate as it is reported has been quite low over the last few years. Next caller."

The caller to the show reflected the growing disconnect between Main Street, Washington and Wall Street. Each month consumers see their living costs go up—whether at the grocery store, the gas station, or at the end of the month when bills are paid. Personal income has stagnated, failing to keep pace with the rise in the cost of living. In the meantime the media keeps spinning any increase—whether it is booming real estate prices, rising gasoline prices, grocery bills, doctor and dentists bills or movie tickets—as nonevents. Prices keep going up. Wages keep falling further behind. It is a repeat of the staginflationary 70’s taxes and inflation. Inflation is on the rise and so are taxes. Property taxes go up each year, making it difficult for homeowners to hang on. The social security base rises each year making more of a worker's income subject to the tax. States are raising sales tax and auxiliary fees, while some states have raised income tax rates. Like many of the items of the CPI index, rising taxes never get counted.

In effect, what this caller was asking was how and when did they change the way they measure the rate of inflation? On a first hand basis he was experiencing inflation in his personal life with rising food and energy costs. There was a major disconnect between what he experienced in real life on a day-to-day basis and what he was told in published inflation reports. The host of the show and the financial reporter from the Times had no answers.

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[FishHooks]

You would have to have a ton of assests to make transaction costs worth while. You could always buy more of the funds/stocks you own as part of a dollar cost averaging strategy.

[chardog]

Apparently my sarcasm wasn't thick enough...

[FishHooks]

I didn't read all your previous posts in this thread, maybe thats why I didn't pick up on it....

lol

[Nepa]

[ QUOTE ]
My personal view is that we have already had massive amount of inflation. This is evident in the exploding prices of such things as real estate, education, energy, healthcare and so forth.

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This is also my thinking. I'm getting killed by Health Care costs. another tread for another forum.

I'm looking to buy a house but I don't want to get stuck buying at the top of the market and college savings is a whole other tread as well.

At least it seems like prices at the pump have topped out for now which should have a limited short term impact on CORE inflation.

[theben]

you can buy bonds indexed to inflation (i.e bonds that always give + real growth)

id mix my assets in a diverse set of stack based mutual funds, bond funds (corporate and definetly muni), some personally held inflation indexed bonds, and some $$ in a money mkt savings for fast access/liquidity

[FishHooks]

[ QUOTE ]
you can buy bonds indexed to inflation (i.e bonds that always give + real growth)



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Known as TIPS, treasury inflated protected securities.