patrick.net

I didn't even take economics in school but my general impression is that price levels are determined by the process allocating the economic surplus of a good -- the producer or the consumer.

Some producers have more pricing power than others, and are thus able to protect themselves from inflation better.

Anybody with a form of monopoly is golden, as are people who enjoy diminished competition via barriers to entry, capital costs, skill shortages, licensing requirements etc.

The cost of production of existing homes approaches $0 -- some houses in Detroit for instance.

The general consensus is that medical providers are more inflation-proof than other sectors.

Gummint wants to keep shovelling money into education since it's a form of stimulus, so maybe they will continue to enjoy pricing power. My old school is 10x the cost of attendance that it was in the 80s, LOL, with Federal aid (grants & loans) picking up much of the difference from what i can tell.

So much of the economy is sheer retail and so much of that is really extraneous. -- the Japanese experience has been to drastically reduce consumption. But one person's savings is another person's pink slip! That's the http://en.wikipedia.org/wiki/Paradox_of_thrift !

FWIW I think C-S isn't entirely useful now that we're in ZIRP:

http://research.stlouisfed.org/fred2/series/MORTG/

Something is really rotten in the State of Denmark. The way the election went, we might be spending a trillion dollars on defense later this decade in one massively massive jobs program.

In the year 2000 federal spending (less social security and medicare) was ~$1T.

That's a very reasonable question.

However, C-S tries to follow the price of an identical home over time. It says nothing about how much people are spending for housing.

Sure, somebody might pay $100K for a home in 1995, and $200K for the exact same home in 2005, but that is most certainly is not spending on "better and larger housing." It's just paying more for the same thing.