The REAL Inflation Rate? Alternative Measures Tell Different Story

November 19, 2013

What is the REAL inflation rate? 

Guest post by Dr. Ken Mayland,  ClearView Economics LLC

When we look at things that we actually buy, We get a different look at inflation...

When we look at things that we actually buy, we get a different look at inflation…

Measured inflation (the blue line) is quite low despite rampant money creation.  But is inflation being realistically measured? 

Perhaps the price of a McDonald’s Big Mac (the red line) would be a good price indicator.  A Big Mac incorporates wages, several commodities, rent, utilities, and transportation costs.  It costs have risen much faster than the official inflation rate.

Likewise, the PNC Christmas Price Index, (the green line) which costs out the items in the “12 Days of Christmas,” encompasses several different types of labor and commodity costs.  Again, those costs have increased considerably faster than the CPI (and interestingly, almost in line with the Big Mac Index).

If inflation is under-measured, then the “true” costs of living are being low-balled and our well -being is overstated.

Speaking of Precision:  Which any one on a fixed income can tell you is happening.

This is what we see when we go to purchase an item at the store for the same price, but get  less product.


The Bread Versus Steel Paradox

June 14, 2012

Why doesn’t the cost of these correlate to the investment needed to produce them?

Bread= $3.80/pound.

Cold drawn bars for machining right now ~$0.66-68/pound.

This great question came from a discussion I had with Ronnie Masliansky, General Manager, Marketing and Product Control, Arcelor Mittal Steel.

Arecelor Mittal Long Carbon North America is a PMPA Technical Member.

So why do you think that the price of these items doesn’t correlate with the investment needed to produce them?


But You Already Knew That

May 30, 2012

Americans Paying More in Taxes than for Food, Clothing, and Shelter

In 2012, Americans will pay approximately $4.041 trillion in taxes, which is $152 billion, or 3.9 percent, more than they will spend on housing, food, and clothing.

Graph and 2012 facts

The Tax Foundation is a nonpartisan tax research group based in Washington, D.C.


Follow

Get every new post delivered to your Inbox.

Join 86 other followers