patrick.net

what happened to my 8O ? needs some leading text?

I guess I just don’t know what to make of the inflation numbers. I hear people complain about being poor while the yack away on their cell phones. If you’re really “poor,” you don’t have a cell phone, or a car, or a TV or DVD player. I guess it’s the concept of “poor” that eludes me. I think it doesn’t mean to me what people are saying. To me, “poor” is a more Steinbeck sort of thing. I guess the Depression sets the standard for that.

MA, are you some blog alter ego of Mr Vincent? I argue the real inflation numbers are being gamed by the government's hedonically adjusted CPI, and you argue Americans aren't really poor as long as they have cell phones. What the hell do cell phones and poverty have to do with the CPI?

Cochran: Why would a Wookiee, an eight-foot tall Wookiee, want to live on Endor, with a bunch of two-foot tall Ewoks? That does not make sense! But more important, you have to ask yourself: What does this have to do with this case? Nothing. Ladies and gentlemen, it has nothing to do with this case! It does not make sense! Look at me. I'm a lawyer defending a major record company, and I'm talkin' about Chewbacca! Does that make sense? Ladies and gentlemen, I am not making any sense! None of this makes sense! And so you have to remember, when you're in that jury room deliberatin' and conjugatin' the Emancipation Proclamation, [approaches and softens] does it make sense? No! Ladies and gentlemen of this supposed jury, it does not make sense! If Chewbacca lives on Endor, you must acquit! The defense rests.

$1.25 soda would be $0.21 in 1956. My grandfather paid a quarter for a smaller soda portion in 1930.

Uh, wrong. Try a nickel:
http://webmail.econ.ohio-state.edu/john/tobin/Levy-Young.pdf

HARM,

Respectfully, try reading links you intend to support your opinion. That article refutes your position, clearly showing a dramatic decline in the real-price of coke over the years studied. In fact, the only real-price increases were during the 30s (therefore mein grossvater wasn't lying, by the way).

p34, p37.

Even on a log scale, the real price of coke has dropped by a factor of 5.

Again I ask, where is this disappearing inflation?

Chewbaccaout: The invocation of "The Chewbacca Defense" itself as an obsufcatory defense. A more stylized version of the "I knew you were going to say that" defense.

Randy,

I don't particularly care whether the inflation adjusted price of Coke dropped from 1889-1959 because of the price rigidity factors explored in the article. You said your grandfather paid a quarter for it in 1930, when he clearly, and I rebutted it with evidence to the contrary.

Again I ask, where is this disappearing inflation?

Gee, I dunno. My father was able to pay 4X his shop steward's salary to buy a house pretty much anywhere in L.A. County in the early 1960s, while now it averages 10-12X median income. Housing expenses in CA are the single largest expense most families have, often consuming 50% or more of gross income. But you're right, I guess I'm just imagining it all.

Randy,

Are you pulling my leg here? Have you become so tired of making pro-bubble arguments that you're now switching sides just to mix thing up a bit --Bull$hitter style?

Randy & MA,

I guess we'll just have to agree to disagree on the CPI/hedonics issue.

MA,

I do see your point on the 'Americans being addicted to spending money (they don't really have) on crap' thing --I've went off on quite a few rants on this subject myself. You nailed the whole thing when for me when you described inflation as "how wage inflation compares to the stuff you “need” to buy". This is how I'd define it too and why I'm convinced the CPI is significantly understating inflation for most shit you really NEED: housing, gas, food, etc.

One thing I'd take issue with, though is the claim (often made by current Administration & incumbents for obvious reasons), that "more people own houses now than before". This just is isn't true. More people today have a mortgage, while actually owning LESS of their home than since the government started keeping records:
http://www.prudentbear.com/Bear%20Case%20Library/chart_library_images/chart_library/homeequity.html

And this is at TODAY's insanely high valuations. Imagine what will happen when prices begin to post large drops?

Do tell. Name a bigger bubble in terms of percent of GDP.

I already named three; I found at least 10 if you extend to the Mercantile/Colonial era. Include Europe and there are many dozens. The gold-economies were rampant with speculative, inflationary bubbles that often exceeded the true value of the entire home country.

i think rand is secular anti-humanist drivel...

in terms of actual % inflation, the housing bubble isn't the biggest. in fact, some commentators say it isn't a bubble at all compared with previous speculative bubbles -- i don't know what sort of % increase is the 'cut-off'. however, the human effect is arguably more severe, because purchasing housing is held to be important, whereas purchasing gold, south sea shares, tulip bulbs, etc is a discretionary item. however, we all need somewhere to shelter, and the dream of home ownership was widely achievable in the mid-20th century. it disturbs me that it's going back to some medieval feudal arrangement without any concern on the part of govt... nearly went to a lecture on the failure of present day 'representative' govts and 'democracy' as it is manifested by these govts last night...

SP,

Thanks for sharing your observation. The rational me agrees that Lebanon is a limited situation and unlikely to expand much further. The irrational recall the plot summary of Left Behind books and cringe.

:/

Does it matter where we are starting from or trying to get to? The truth is it's tough for those who have thier homes and investments (not me) or are trying to establish foothold in the economy. There has definatlely been a shift in wealth and it takes more and more money to just be middle class. At times it's scares me that I might work all my life and not really scratch the surface. I left the west coast regretably because it was getting harder and harder to just keep up. I saved and saved had low dept load and it still wasn't enough. Things went up double digits the last five years how an you fight that? Now everyone waits with baited breath to se the coming crash of calamity. It's not going to help us who have not when those who have F up the economy for years. THis could be a bad fall and an even longer wait for us on the sidelines.

Is it true that the economy and growth in China is causing this run up of gas prices? Are the people prospering or just the rich few who own businesses? Does the chinese goverment really trust america long term or are those few who are only interested in short term gain doing most of the business? Seems the job picture in the US has become bleaker once it became apparent that chinese and indians will work for wages that are concidered poverty level here. American business has become greedy and bottom line thinking to the point where they'll go overseas for workers. There they will not be regulated to pay fair wages, health insurance, and retirement benefits. It has all but help destroy the middle class here.