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Tim, I gotta defend Dan a little bit here...
> Dan:
>
> The problem is that you are using these silly CPI and PPI numbers and the
> oddly packaged ex this and that that has been so popular these days. If
you
> want to look at the real costs facing people these days, the CPI and PPI
are
> practically useless.
What are you recommending that's better? I'll be the first to say the CPI
and PPI are flawed, but silly?
> How many of us think that tobacco products qualify as
> CPI components?
Not many, but the 50+% of households that don't own computers probably don't
think those numbers should be included either. The standard is what amount
of any given product is being "consumed" by the average consumer, and what
percentage of their disposable income is it "consuming." Until somebody
gives me a better approach, I'll stick with that one.
> Am I qualified to say that? I think so. My graduate economic
> work was done at the University of Chicago at a time when they had the
best
> economic minds in the world teaching and mentoring there. This economy is
> generating inflation and if you want to rule out counting asset inflation
as
> a cause for inflation, that's your choice. It's wrong. But go ahead.
Tim, nobody's ruling out asset inflation as a potential cause of inflation
in the overall economy, but you seem to think that this effect is a foregone
conclusion, when there simply is very little or no evidence that it is
currently happening. Since you've brought academics into the discussion,
show me a single repectable study by any major university or think-tank that
irrefutably proves the so-called "wealth effect" exists. Give me the name
of the economics journal or professor, and I'll contact him or her.
I've been searching far and wide for this data, Tim, and so far I haven't
found a single shred. There's no proof that it exists. The next time
you're watching the news and you hear something about the wealth effect,
listen closely and you'll hear things like "it is believed that" or
"economists estimate" when discussing the causal relationship. In other
words, they have no hard proof. There's plenty of theoretical proof that it
doesn't, which I can expand upon if you want.
>
> I also worked on several BLS revision studies--so I know quite a bit about
> economics as it relates to labor, as well. And wages are rising rapidly.
> You'd better start looking at total labor costs. They are running high and
> are going to go much higher. Where I live [the north shore of Chicago],
> there are simply no workers available for most jobs. None.
Wages are rising, but you're overlooking one very important point. More and
more workers are having their compensation tied either directly or
indirectly to their productivity level. In other words, if they're getting
a raise, it's because they're producing more in the same amount of time, and
therefore the company does not have to pass the cost of the wage increase
onto consumers. The complete opposite was true when unions reigned supreme
and workers were given COLAs whether they were more productive or not.
Inflation became a self-fulfilling prophesy.
Things have changed my friend!
Bruce
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