Hedonic Substitution: How the Gov keeps inflation near zero

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Hedonic Substitution: How the Gov keeps inflation near zero

PostBy: lsayre On: Wed Feb 20, 2013 4:42 pm

This example of "Hedonic Substitution" may admittedly be a bit of an exaggeration, but it displays one of the many tools that our Government utilizes in keeping the "reported" rate of inflation at near zero levels:

If a solid cherry wood dining table cost $750 in 1990 and the same table costs $2,500 today, but you can still get a nice cherry wood laminate (composite) table that looks just like it today for $750, has there been any recordable inflation here, or not?

Answer per the government: No inflation for this example, complements of Hedonic Substitution.
lsayre
 
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Re: Hedonic Substitution: How the Gov keeps inflation near zero

PostBy: Flyer5 On: Wed Feb 20, 2013 6:59 pm

And no American jobs to create the laminate table. So after a few yrs no one has the $750 to buy the table.
Flyer5
 
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Re: Hedonic Substitution: How the Gov keeps inflation near zero

PostBy: jpete On: Wed Feb 20, 2013 7:20 pm

Rising prices are a symptom of inflation.

Inflation is an increase in the money supply and it's pretty easy to look at the M1, M2, and M3 numbers and see the increase.
jpete
 
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Re: Hedonic Substitution: How the Gov keeps inflation near zero

PostBy: franco b On: Wed Feb 20, 2013 8:59 pm

Obviously those who create the new money get full value while those at the end of the line, primarily the poor, get screwed.
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Re: Hedonic Substitution: How the Gov keeps inflation near zero

PostBy: lsayre On: Thu Feb 21, 2013 7:10 am

An example of hedonic Substitution that i came across indicates that if the price of steak goes up people switch to chicken, so they do not EXPERIENCE inflation. And if you do not experience inflation, somehow that magically means that there wasn't any. I believe this to be the key to how the government works.

Buying Chinese goods in an effort to not directly experience inflation would trigger all sorts of gleeful Hedonic frenzy at the government level. They can proclaim as a result that the experience (or perception of) of inflation is low, so such trivial things as social security raises and also private level corporate raises (indexed once to real inflation, but beginning back in about 1980 to be more and more heavily Hedonically adjusted for inflation) can be kept low, low ,low.
lsayre
 
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Re: Hedonic Substitution: How the Gov keeps inflation near zero

PostBy: Rigar On: Thu Feb 21, 2013 7:44 am

Makes me wonder if this is why the price of oil and gas are so high.
We cant substitute anything for it (yet).
There is an abundance of it worldwide (especially with advances in drilling technologies)
..but between regulations and ethanol i think they are "manufacturing" an improvement on a product that doesnt need (or warrent) one.
This inflates the price artificially...and affects all industries that utilize it (which is everyone)

...imagine your life right now if the prices of EVERYTHING you buy today where the same...BUT oil and gas was at prices of mid 1980's...

One other sneaky thing that companys do (mainly food industry) is re-"portion"
...to make it look like prices arent rising so much
ex...coffee is commonly sold in 12 oz bags...not the pound- which is 25% less pruduct
OJ....most large bottles are 59 oz.... not 64 - roughly 9% less
etc...etc
Rigar
 
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Re: Hedonic Substitution: How the Gov keeps inflation near zero

PostBy: SMITTY On: Thu Feb 21, 2013 10:06 am

Not only that stuff that you can see, but what about the stuff you CANNOT see .... like the cheap cheap piston rings GM threw in your 5.3 V8. Hundreds ...maybe even THOUSANDS of '09's left the factory burning a quart every 500 miles. :shock: The quality of goods today - ALL goods - is down the toilet. Or the cheap door pins & bushings that fail in just a few years of use. That's inflation I can do without ....

Fuel costs are high not just because the dollar is nearly worthless, but also because obama is doing everything in his power to keep it there. We've heard them say it from their own mouths - "we should have fuel prices close to Europe's levels - that way people will BE FORCED into green alternatives", one member of his administration openly stated. Obama himself said "electricity rates would necessarily skyrocket" for those power companies that chose to burn cheap, affordable, & AMERICAN coal.

He has done NOTHING to help fuel costs. Things are exactly the way they want them. :mad:
SMITTY
 
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Re: Hedonic Substitution: How the Gov keeps inflation near zero

PostBy: lsayre On: Thu Feb 21, 2013 1:12 pm

The coming (if not effectively here now) Hedonic Substitution for coin and paper currency will be cyberspace currency. That way hopefully (seeing this from the governments perspective of course) we will not notice that the day is coming when nothing you can actually hold in your hand will be valuless enough to represent the unit level value of our currency. I can easily envision the day when it will take more than a dollar to fabricate a dollar bill out of paper....
lsayre
 
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