[Rod_Cloutier]

Think of it, prices have largely remained the same despite 2 years of massive layoffs and depression.

That has to be an alternative definition of inflation. Prices are unchanged, but the ABLITITY TO PAY has dropped. When the total volume of what you can buy vs what you earn diminishes that is by definition inflation.

The current orthodox line of reasoning that prices of goods have to rise rapidly vs fixed buying power is a flawed way of thinking. As buying power is compromised, and prices stay the same- inflation still occurs. Less is consumed as compared with a different time period where economic growth occured and incomes rose with fixed prices.

As millions continue to lose their buying power, inflation is occuring on a massive scale as living standards drop off a cliff.

[Plantagenet]

When people lose their jobs and incomes, it isn't called inflation.

Its called impoverishment, going broke, being cleaned out, being in arrears, being ruined, being taken to the cleaners, becoming insolvent, closing down, closing one's doors, crashing, defalcating, defaulting, droping in status, droping a bundle, ending, finishing, folding, going bankrupt, going belly up, going bust, going into chapter 11, going out of business, going to the wall, going under, losing big, losing one's shirt, etc.

[Xenophobe]

That has to be an alternative definition of inflation. Prices are unchanged, but the ABLITITY TO PAY has dropped. When the total volume of what you can buy vs what you earn diminishes that is by definition inflation.

Its called a "lower standard of living". Not hyperinflation. Its required to work off the debt from "the good ol' days".

As millions continue to lose their buying power, inflation is occuring on a massive scale as living standards drop off a cliff.

The drop hasn't been a cliff any more than the "natural gas cliff" of 2005. Downturns are profit opportunities, in real estate in particular. Its why we HAVE good times, so we can get ready for the bad times, when the potential to make an absolute KILLING skyrockets.

[dolanbaker]

Its called a "lower standard of living". Not hyperinflation. Its required to work off the debt from "the good ol' days".

Problem being, as money is essentially energy and we are (getting clearer) past peak oil, sustained growth is likely to be almost impossible. Paying down debt from "the good ol' days" is removing money from the consumers and placing it with the banks, the banks may try to lend it back out but most people have no appetite to borrow any more.

Stagflation is what we're after getting!

[Xenophobe]

Problem being, as money is essentially energy and we are (getting clearer) past peak oil, sustained growth is likely to be almost impossible.

Psycho babble and confusion. The amount of energy I get from burning a $5 bill is inconsequential when compared to the 2 gallons of gasoline I can acquire and combust instead. Who would ever confuse the two?

Certainly increases in GDP don't require increase in oil production.

Stagflation is what we're after getting!

Certainly a possibility. Its happened before during other peak oils....historical precedence and all that, right?

[Sixstrings]

Its called a "lower standard of living". Not hyperinflation. Its required to work off the debt from "the good ol' days".

It's called a steak only costs a dime but you don't have a dime. Well, that was deflation and the Great Depression. I guess now you'd say a steak will cost a hundred bucks but you still don't have a dime.

[Quinny]

Thanks for the graph - it shows clearly how the link between real wealth and financial wealth has broken down.

BTW UK inflation over 3% now, which given the drastic downturn in the economy is scary to say the least.

Problem being, as money is essentially energy and we are (getting clearer) past peak oil, sustained growth is likely to be almost impossible.

Psycho babble and confusion. The amount of energy I get from burning a $5 bill is inconsequential when compared to the 2 gallons of gasoline I can acquire and combust instead. Who would ever confuse the two?

Certainly increases in GDP don't require increase in oil production.

Stagflation is what we're after getting!

Certainly a possibility. Its happened before during other peak oils....historical precedence and all that, right?

[dolanbaker]

Thanks, that chart actually proved my point!
GDP is now running on hot air and has run out of thermals.

[Xenophobe]

Thanks, that chart actually proved my point!
GDP is now running on hot air and has run out of thermals.

Glad to be helpful when demonstrating that GDP and oil consumption aren't linked. There's an even better example after the 1979 global peak, something like 15 years of GDP growth without increases in oil consumption. I'm sure there are others, I'll check.

[Golgo13]

Thanks, that chart actually proved my point!
GDP is now running on hot air and has run out of thermals.

Glad to be helpful when demonstrating that GDP and oil consumption aren't linked. There's an even better example after the 1979 global peak, something like 15 years of GDP growth without increases in oil consumption.

That's because GDP is artificially inflated garbage.

[Xenophobe]

That's because GDP is artificially inflated garbage

Econometrics is a relatively new aspect of economic science, is it not? Managing an economy via information...certainly it is easy to nit pick about how some metric you don't like is "garbage". My suggestion would be to collect a PhD in economics with a minor in statistics (or something other applicable area), write a book on your favorite process for calculating a better number, and allowing the people who know the ins and outs of this type of econometrics a chance to compare your system to the one currently in use. Then the people who actually do this stuff for a living can decide between the two, as to which is better.

[rangerone314]

Thanks, that chart actually proved my point!
GDP is now running on hot air and has run out of thermals.

Glad to be helpful when demonstrating that GDP and oil consumption aren't linked. There's an even better example after the 1979 global peak, something like 15 years of GDP growth without increases in oil consumption. I'm sure there are others, I'll check.

What makes you think that GDP actually measures the economy or is not an outright fabrication?

Next thing you'll be telling us is that the CPI is an honest measure of inflation.

Maybe you'll tell us that when the stock market "goes up" that it is because the economy is improving. (and not because the dollar is devaluing)

I wonder what happens to the GDP figures when you cause major inflation using low interest rates and deficit spending?

[rangerone314]

That's because GDP is artificially inflated garbage

Econometrics is a relatively new aspect of economic science, is it not? Managing an economy via information...certainly it is easy to nit pick about how some metric you don't like is "garbage". My suggestion would be to collect a PhD in economics with a minor in statistics (or something other applicable area), write a book on your favorite process for calculating a better number, and allowing the people who know the ins and outs of this type of econometrics a chance to compare your system to the one currently in use. Then the people who actually do this stuff for a living can decide between the two, as to which is better.

Why bother? Economists are just the modern version of the priestly order giving religious support to the rulers, just like in ancient times.

The CPI, etc are tailored to the needs of the rulers, to make them look good, and stop growth in outlays tied to the CPI.

[Armageddon]

GDP is about as useless and somebody taking out a loan for a million dollar house and calling themselves wealthy.

[Xenophobe]

What makes you think that GDP actually measures the economy or is not an outright fabrication?

Two different questions. I think the GDP measures the economy because it was designed to do that, and I don't think its an outright fabrication because it has a basis. You might not AGREE with the basis, which is why the opportunity to create a better one undoubtedly exists.

Next thing you'll be telling us is that the CPI is an honest measure of inflation.

It is a measure of inflation, "honest" implies that someone is getting involved for a reason other than objective measure of the parameters involved. I do not spontaneously assume that people are just making the CPI anything they wish by flipping a coin, guessing, or making up the number. Do you have a better suggestion on how to measure it, and if so, have you attempted to have it published as a competing method in any peer reviewed journal somewhere? Seems like a reasonable place to start.

Maybe you'll tell us that when the stock market "goes up" that it is because the economy is improving. (and not because the dollar is devaluing)

I have never said anything about using the stock market as a measure of the economy. Please ascribe your strawmen to others.

I wonder what happens to the GDP figures when you cause major inflation using low interest rates and deficit spending?

That would depend on whether or not you are referring to real or nominal GDP I suppose.

[Golgo13]

That's because GDP is artificially inflated garbage

Econometrics is a relatively new aspect of economic science, is it not? Managing an economy via information...certainly it is easy to nit pick about how some metric you don't like is "garbage". My suggestion would be to collect a PhD in economics with a minor in statistics (or something other applicable area), write a book on your favorite process for calculating a better number, and allowing the people who know the ins and outs of this type of econometrics a chance to compare your system to the one currently in use. Then the people who actually do this stuff for a living can decide between the two, as to which is better.

Sooner or later we have to answer the question in the linked article: Where does the nonsense stop?

As long as we are counting services rendered but not paid, why aren't we adding in the value of sexual relations? Consider for example teenage sex. How much is that worth to the average teenage guy? With just a little more creative thought processes and by merely carrying current procedures to their logical conclusions we can really get our GDP revved up. Isn't that what we are implicitly doing anyway?

Next thing you'll be telling us is that the CPI is an honest measure of inflation.

It is a measure of inflation, "honest" implies that someone is getting involved for a reason other than objective measure of the parameters involved. I do not spontaneously assume that people are just making the CPI anything they wish by flipping a coin, guessing, or making up the number. Do you have a better suggestion on how to measure it, and if so, have you attempted to have it published as a competing method in any peer reviewed journal somewhere? Seems like a reasonable place to start.

How about we just go back to the pre-Boskin commission method that didn't exclude energy and food (the two things most sensitive to inflation) from the core CPI?

[americandream]

Think of it, prices have largely remained the same despite 2 years of massive layoffs and depression.

That has to be an alternative definition of inflation. Prices are unchanged, but the ABLITITY TO PAY has dropped. When the total volume of what you can buy vs what you earn diminishes that is by definition inflation.

The current orthodox line of reasoning that prices of goods have to rise rapidly vs fixed buying power is a flawed way of thinking. As buying power is compromised, and prices stay the same- inflation still occurs. Less is consumed as compared with a different time period where economic growth occured and incomes rose with fixed prices.

As millions continue to lose their buying power, inflation is occuring on a massive scale as living standards drop off a cliff.

The stuff that the cb's cannot control, stuff subject to constraints beyond our grasp like oil and geology for example, are on the inflationary climb. Linked to that is the filght of American and Western jobs to the low wage Third World as capitalists struggle to preserve profits. The downside of course is a Western worker who increasingly has to multitask and indebt him/herself to survive as a consumer. This is the fate that awaits the Third World worker as his tasks are eventually automated as a consequence of his being priced out by costly commodities. Here is where the fun starts.

[Xenophobe]

Sooner or later we have to answer the question in the linked article: Where does the nonsense stop?

You assume nonsense. I simply see a system, an imperfect one, and ask, how do you suggest we improve upon it without losing the value of having a form of measure like this around?

For example, if you just read this website, you would think the entire country has gone off a cliff and is in the midst of a depression. Certainly that is not my perspective, but having a majority of the people at some place just SAYING this thing would lead the uninitiated to perhaps believing a falsehood.

How about we just go back to the pre-Boskin commission method that didn't exclude energy and food (the two things most sensitive to inflation) from the core CPI?

It is a reasonable statistical procedure to separate two distinct populations and quantify them independently, otherwise one of them, suffering from much larger variability, might drown out the other. How do you suggest to solve this problem once you merge these populations back together?