Some Food Prices Have Been Falling Over Last Year
| Item | % Change Feb. 2011-Feb. 2012 |
|---|---|
| Lettuce | -30.1% |
| Cabbage | -26.7% |
| Tomatoes | -21.8% |
| Broccoli | -18.9% |
| Strawberries | -15.6% |
| Oranges | -13.9% |
| Peppers | -12.3% |
| Bologna | -11.8% |
| Lemons | -11.1% |
| Potatoes, Frozen | -7.7% |
| Pears | -6.3% |
| Butter | -5.5% |
| Grapes | -4.1% |
| Rice | -3.9% |
| Bananas | -3.5% |
| Round Roast | -3.4% |
| Chicken Breast | -2.2% |
| Apples | -2.2% |
| Ham | -0.8% |
| Grapefruit | -0.5% |
For the food items listed above (data here), the average retail prices have fallen over the 12-month period from February 2011 to February 2012, and for about half of the items the deflation has been in double-digits.
74 Comments:
Gee- the healthy items fell in price. What a surprise.
Americans who complain about food prices are not really eating food, but rather food-like substances.
No wonder they are obese and unhealthy.
Don't eat anything that people 100 years ago would not recognize as food, and don't eat anything that has ingredients that a normal person would not have in their pantry (high fructose corn syrup, xanathan gum, etc.).
Of things that fell more than 10%, only one, Bologna, is unhealthy.
The problem is not food prices, but rather the dietary habits of Americans.
What Zimbabwe and North Korea are to economics, the US is to dietary health.
Perhaps, food inflation is a function of buying more and better food, from lower interest rates, the payroll tax cut, paying-off or defaulting on debt, etc.
Some people will actually pay $96 for a $40 prime rib roast.
Also, because of higher gasoline prices, fewer people may shop at several stores or more often to take advantage of bargains.
Of course, if the Supreme Court says that Congress has the power to force us to buy things, they may force us to buy broccoli.
That'll drive up the price.
"Gee- the healthy items fell in price. What a surprise"...
That's because they're dangerous to eat kmg...
Investigation Announcement: Multistate Outbreak of E. coli O157:H7 Infections Linked to Romaine Lettuce
December 7, 2011
Salmonella outbreak strikes 26 states
August 3, 2011
juandos: "That's because they're dangerous to eat kmg..."
That's right! Vegetables and fruits are crawling with disease organisms. I've never heard of anyone getting sick from eating bologna, so that's all I eat...that and Wonderbread.
But arugula is up 10%. 10%! Oh, the humanity!
Obama and his regime are responsible for this food disaster !!!
It's the speculators driving the food prices down! How will farmers ever survive?
Just more meaningless data. The price of brocoli today has nothing to do with the price of brocoli last year, or the price of bologna ever.
It's the speculators driving the food prices down! How will farmers ever survive?
Just more meaningless data. The price of brocoli today has nothing to do with the price of brocoli last year, or the price of bologna ever.
"I've never heard of anyone getting sick from eating bologna, so that's all I eat...that and Wonderbread"...
Why do you think they serve it up in prison ron h? Its a balanced meal and I ask you, what sort of self respecting bacteria would want to live in bologna?
you can always cherry pick a few items. some foods have soared in prices as well, and as the aggregates show us, far outnumber those dropping.
food at home has been the biggest driver of CPI apart from energy.
peak-
and some people could not tell prime from ungraded to save their life.
$5/pound for aged prime rib? do you even know what prime rib is?
i suggest you try googling it.
right now, $15/lb for aged prime rib is a STEAL.
a quick google of "prime rib price" shows most AT $20+.
you want to buy a kia, well, that's up to you, but trying to use its price to make claims about prosches is just silly.
I agree Morganovich,
While there are food prices falling, there are others that are soaring. Beef and lamb, in particular, have skyrocketed. Especially in a food-culture such as ours where meat is central, the price increases are substantial. Seafood's been rising as well.
All that being said, food is a tough cost to predict. A bumper-crop can cause prices to fall virtually overnight whereas a drought can have the opposite effect. Of course, I'm preaching to the choir talking about food volatility.
Morganovich says: "right now, $15/lb for aged prime rib is a STEAL."
Sounds like deflation.
i noticed somehting interesting about that data series.
lots of the things up most in price have been dropped out of the series.
try looking up rib eye steak or porterhouse.
all seem to have been dropped years ago and replaced with things like sirloin or round that have less inflation. rib roast, gone and replaced with much cheaper round roast (which, btw, was up 8% feb to feb)
bacon, up 7%
eggs, AA dropped, replaced with cheaper A graded eggs, and still up 5%.
milk, up 5% (whole)
whole wheat bread, up 10%
orange juice (frozen concentrate) up 13%. fresh is doubtless up much more.
coffee up a whopping 27%.
sure looks like breakfast is getting a lot more expensive.
i'm sure peak will make magical claims that he gets coffee at $1 pound and his breakfast is cheaper than ever, but the rest of the country sure isn't seeing it that way.
Curses, Morganovich, you beat me to the punch! I was just about to post about the very same items!
Morganovich says: "you can always cherry pick a few items."
That's one reason why some shoppers have zero inflation, while others have 8% inflation.
"Morganovich says: "right now, $15/lb for aged prime rib is a STEAL."
Sounds like deflation."
and you wonder why i think you have no idea what inflation/deflation is.
it was a birthday gift from a butcher. that piece of meat would have cost you closer to $150. he sold it to me at cost.
and if you think $15/pound for bone in rib is cheap relative to a couple years ago, you are out of your mind.
Interesting that prime rib prices should have been brought up...
I bought some Saturday here in the St. Louis,, Mo area at the rate of $24.34/lb... It had been higher recently but a year ago is was just under$19/lb...
Why its interesting is that one of the people at the dinner is a chef/cook/whatever at one of the local Ruth Chris Steak House here and she told me that the resturant is basically charging their customers about $25/lb for the same cut and quality of meat but make up the costs on the other items in the dinner order...
"That's one reason why some shoppers have zero inflation, while others have 8% inflation."
because lettuce is a great substitute for coffee?
get a grip peak, this dogmatic nonsense is really getting absurd.
also note:
THAT'S NOT ZERO INFLATION.
that's dropping your living standard to keep prices equal.
you are the one who likes to claim quality adjustments are needed, yet you seem unwilling to apply them to yourself when you trade down to lower quality goods. if you eat hamburger instead of steak, sure, you can keep your grocery bill constant, just like you can keep your auto bill constant by buying a kia instead of an accura.
but you paid the same for less quality.
pick a story and stick to it peak, you are playing this quality issue from both sides.
by your very own preferred logic, you ARE experiencing food price inflation.
i've been prowling through this data a bit.
one of the really interesting takeaways is that steak is just flat out gone.
porterhouse, rib eye, t bone, they are all dropped from the series as are all the prime and choice cuts.
this is exactly why CPI understates inflation.
they assume round is a substitute for price, but then fail to impose the quality adjustments they love to use in things like dvd players.
prime rib eye is MUCH higher quality than select round. trying dropping a select round steak on the table at a serious steakhouse and see what the quality impression is.
fact is, the two offset. that makes the whole substitution idea complete nonsense for such products.
same with dropping from AA to A eggs.
food prices for a basket of constant quality are up a lot more than the 4.5% the CPI is showing.
Morganovich, how does the quality of the coffee fall when the same coffee goes on sale at about 50% off?
One thing to keep in mind (and I am sure everyone is aware of this, but it's worth repeating) is that the "market-basket" of goods the CPI uses are constantly being reviewed and altered, depending on the buying habits of the people involved in the survey. The CPI market-basket used currently comes from information supplied in 2007-2008.
It makes sense that some things, such as rib-eye, would be dropped and replaced with other, more frequently bought items such as hamburger.
It is exactly because of these changes that the CPI is a measure of prices not cost of living. That's not to say there aren't flaws in the methodology; it was created by humans so it inherently has flaws.
"Morganovich, how does the quality of the coffee fall when the same coffee goes on sale at about 50% off?"...
Well PT as one who considers coffee every bit as necessary as oxygen I can you that if you buy one of the brand name coffees off the grocery store shelf that is exactly what happens...
Different beans, some of lower quality are used as 'weight filler', hence the price drop occassionally...
Juandos, so, you're saying the brand name coffees are different when they're on sale?
Columbia Missouri seems to have a good meat market:
Mizzou Meat Market
All beef is aged at least 18 days and predominately "Choice" grade
Porterhouse Steak
$7.44 per pound
T-Bone Steak
$6.99 per pound
Ribeye Steak
$7.44 per pound
Satisfy your inner carnivore by picking up USDA approved, prime cuts of beef, pork and lamb from Mizzou Meat Market.
Ok, now this is getting ridiculous. CPI is a national average. Of course, you will find meats below the national average and above the national average. You may even have outliers. But the meat-market prices in Columbia, MO means nothing to a person who shops exclusively in Boston, MA or Phoenix, AZ. To take the prices in MO and try to extrapolate a national average from that is a fool's errand.
Where Morganovich lives, ribeye may be $15/lb and where Peak Trader lives it may be $7.44/lb. To make it even more confusing, I just paid $13/lb for ribeye. It also depends on the type of ribeye. If you buy the Shaw's, FDA Approved ribeye, it would be around $7-$8/lb. If y ou bought organic, free range, no hormones, ribeye it would be more expensive. That's the whole point of the Index in the first place. So, is it really worth our time to bicker about actual prices? Is this a sign we all agree food has gone up and it's just a matter of how much?
peak-
"Morganovich, how does the quality of the coffee fall when the same coffee goes on sale at about 50% off?"
that's a foolish example. that sale price is already included in the aggregates. you are trying to double count.
what you are trying to duck is this: you used to buy a choice ribeye. the price rose, so you switched to a select sirloin.
it's lower qulity meat, it's cheaper, and you like it less. if you liked it (valued it) more then you would have already been buying it. but you weren't. thus, the substitution is offset by a quality drop. (that never gets applied).
you can keep you bill flat by swapping in lower quality items, but that's still inflation as you got less for the same money.
jon-
"CPI uses are constantly being reviewed and altered, depending on the buying habits of the people involved in the survey."
that's actually not strictly true. it's constantly being revised, but not based on buying habits. that's why healthcare is 8% of cpi and 16% of gdp and why rent is 20% of owner equivalent rent and 40% of housing expenditure.
food is much the same.
they keep taking out higher quality items like ribeye and rib roast and replacing them with lower quality ones that are not inflating as much. AA eggs become A. rib roast becomes round.
this is not done with much reference to actual consumption at all best i can tell, but rather based on geometric weighting models that assume that all price moves are supply driven, and absurd assumption.
if this is the result of a survey, then the survey is badly flawed. how else could it underweight rent and healthcare so badly?
if pinot noir goes up in price and melot drops because of the movie sideways (as did happen) the cpi would increase merlot weighting and drop pinot due to price moves when actual consumption went the other way.
they apply quality changes to this year's cars, but not when they drop AA eggs for A.
it's what makes the CPI basket so ridiculous.
if you systematically underweight all the things going up in price most without regard to the actual consumption patters, you get a severe downward bias.
peak-
that mizzou meat market is such a cherry pick is unreal.
it's an outlet for the university's school of agriculture and not run for a profit and benefits from beef raised the same way.
you could not find a less nationally representative example if you tried.
a quick gooling of "porterhouse steak price" shows typical prices 3-4X that.
why go to such great lengths to deceive?
Quote from Jon Murphy: "That's not to say there aren't flaws in the methodology; ..."
The whole CPI is a giant farce. It's treated as if it's something scientific and is then used to drive every monetary and financial policy of the state. It's one flawed concept built on another.
Morganovich says: "what you are trying to duck is this: you used to buy a choice ribeye. the price rose, so you switched to a select sirloin."
There are many items I wouldn't buy at any price.
What I'm saying is the volatility in hundreds of food prices can result in little or no food inflation and with no significant changes in quantity or quality.
That's not true with gasoline, for example.
Morganovich,
My understanding of the CPI is they send a survey to about 7,000 families and ask them to keep a diary of what they purchase for a 2-week period. This is done every quarter and weights are then attached depending on the buying habits. I'd guess that the underweighting is due to few people having medical expenses during that 2-week period.
BTW, I am basing this on information here: http://www.bls.gov/cpi/cpifaq.htm#Question_6
We both agree the basket idea is stupid. Personally, I like the idea C2ER uses when they do their ACCRA Cost of Living survey. They use a very specific good/service (for example, "1lb Jimmy Dean Pork Sausage") and keep it constant across time and states. You still have the market-basket idea, but quality is kept constant.
morganovich says: "that mizzou meat market is such a cherry pick is unreal."
Well, isn't that what you want to "cherry pick" if you live in that city?
peak-
...
why go to such great lengths to deceive?
One of many reasons is that it's a refuge of the unaware or incompetent to use things like false comparisons (logical fallacies).
Even the BLS data shows food is up over 4% in the last year.
peak-
and you really think that that one, tiny, localized set of prices makes ANY difference to the national aggregates?
that's like saying my local bar has nickel beer on tuesday so national beer prices are flat.
Bart, are you saying all food rose over 4% in a linear line?
jon-
i understand that that is how the CPI claims to work, but they then add all manner of geometric and hedonic weightings and adjustments to it and come up with deliberately distorted figures.
i do not use the term "deliberate" here lightly. the whole boskin report was specifically deigned to do this in order to reduce social security COLA and medi program cost adjustments.
i'm not sure if you have ever read the actual report, but if not, i really recommend it. it's stunning in its assumptions and lack of actual empiricism.
the irony of underweighting healthcare by 50% in the aggregate used to determine health care price adjustments for federal programs gets pretty thick.
Morganovich, the Fed also chased imaginary inflation in 2007 and it resulted in a recession.
At least Bernanke proved he's not an "inflation dove."
"Juandos, so, you're saying the brand name coffees are different when they're on sale?"...
Yes indeed PT, Hills Bros. Folgers, etc do it...
Its not only for reasons of gaming sales but it occassionaly has to do with what beans are readily available on the market for purchase in very large quantities...
Yeah I do know about Mizzou Meat Market but a 75 mile drive when gasoline is near $3.90/gal makes that meat very expensive...
There's two places that have at least as good quality meat if not better and they're both 10 miles away from where I'm sitting...
Kirkwood Meats not only has aged prime beef but they also have 'smoked' beef, pork, and fresh water fish from Missouri also...
Its all expensive (relatively speaking) but on occassion worth it...
peak-
2007 inflation was imaginary?
then why did CPI double from 2007 to 2008?
even that outlandishly understated aggregate was running in the high 4's by 2008.
now you are just making things up.
rates in 2007-8 were hardly high. they looked like the early 90's.
further, you have your dates wrong.
the rate hike came mostly in 2004-5.
rates peaked in the summer of 2006 and were dropping all through 2007.
seriously, do you just make this stuff up or what?
Morganovich, we had a (temporary) oil shock.
The Fed maintained a restrictive stance through 2007 and later (fortunately, the Bush tax cut in early 2008 gave the Fed time to catch-up).
Inflation remains overstated, because net quality ajustments have been too little and too late.
peak-
your history is extremely revisionist and your claims, as ever, unsupported.
the oil price shock had a great deal to do with the rate cuts. they caused a great deal of it.
oil prices:
2006: $58.3
2007: 64.20
2008: $91.48
the rate cuts came well before the oil spike.
in fact, the rate cut CAUSED a lot of it. the dollar lost 30% of it's value from summer 2006 to early 2008. that means about half the spike was currency related.
what drove the dollar dive? rate cuts and printing money.
then you make the outlandish claim that quality adjustments are understated. but, of course, you will not be able to defend it. i invite you to try. what empirical evidence do you have to back up your claim?
lots of negative quality gets into the cpi for free all the time. they drop AA eggs and use A but never adjust for the quality drop.
The % of income people pay for food is less today than 20 years ago. Of the % paid for food, farmers get substantially less and processors and handlers get substantially more than 20 years ago.
Health care costs substantially more, and of the amount paid, providers get less and handlers get more.
Morganovich, you seem to believe the global economic boom had nothing to do with higher oil prices, and U.S. trade deficits reaching $800 billion a year, or 6% of GDP, had nothing to do with the depreciation of the dollar.
The Fed doesn't control where money flows, whether it's into a U.S. market, foreigners, or the U.S. government.
It attempts to maintain sustainable U.S. macroeconomic growth through price stability using the money supply.
Also, the BLS takes a conservative approach in quality adjustments. Unless you believe quality has deteriorated more than improved, then inflation may be understated.
Moreover, I give the Fed credit for easing the money supply while oil prices continued to rise, although it should've began the easing cycle sooner, e.g. early 2007, because of lags in the adjustment process.
peak-
"What I'm saying is the volatility in hundreds of food prices can result in little or no food inflation and with no significant changes in quantity or quality."
nope. that's totally untrue. you are assuming that all prices are supply driven.
MAYBE one person can do this (though likely not as if you liked the other, cheaper items as much, you'd already have been eating them) but the market cannot.
one individual can beat the stockmarket. but all investors in aggregate cannot. food works the same way. if we all switch, the price of the new item rises and the old one falls. you cannot get around the aggregate move for the economy as a whole. some may see more inflation, some less, but the aggregate IS the market.
Morganovich, what if 10 people need airline tickets right away and pay $300 each, while 90 people are able to buy them on sale at $100 each?
peak-
well, then the average price of a plane ticket is $120. so what?
if that's the price where the airline makes its target profit, then there is no way around it.
if those 10 high payers book early, the airline will raise prices on the next buyers until the ASP is $120 again.
you cannot get around that.
this is the same flawed notion as your coffee on sale idea.
that's already in the price aggregate.
you are trying to ague that we can all beat the stockmarket, a fact i presume you know not to be true.
Morganovich, however, if you tell the 90% that the airline ticket is $120, they'll tell you it's $100.
so?
are you claiming that 90% of people buying food are getting killer deals and that 10% are paying 3X as much.
i'd love to see your evidence for that.
what is it you think that demonstrates?
gasoline prices vary all over the country. where i live is very cheap relative to where i used to,
but that does not change the national aggregate.
Morganovich, it "demonstrates" I'm supporting my statement above:
"...some shoppers have zero inflation, while others have 8% inflation."
peak-
so what? no one ever argued that everyone sees the same price changes. coffee may be up 54% in seattle and flat in boisie. but all the coffee nationwide is up 27%
thus, for every person in boisie enjoying no inflation there must be 2 getting hit in seattle (assuming a 2 city world).
to claim that bosie is the typical experience is misleading and inaccurate.
that's like saying "my fund lost no money in 2008" so the market wasn't so bad.
there are always outliers. that's why we use aggregates.
a 2% increase in average wages doesn't mean everyone got a raise any more than saying the average american is 10 pounds heavier than a decade ago means everyone gained weight.
in an economy as an aggregate, any individual can be an outlier, but such is proof of nothing about the economy as a whole.
you can't use paulson to stand for 2008 equity returns.
"Why do you think they serve it up in prison ron h? Its a balanced meal and I ask you, what sort of self respecting bacteria would want to live in bologna?"
Hmm. I hadn't thought of that. I just know that fried balogna with fried eggs is, in my estimation, right up there with steak & eggs, and just behind fried spam & eggs.
juandos squeaked :
That's because they're dangerous to eat kmg...
I can't believe that a person actually makes a sweeping statement that fruits and vegetables are 'dangerous to eat' but processed meats are not, based on one anecdote.
Is a person like juandos really this stupid? That too on an economics blog?
Peak: "...the Fed also chased imaginary inflation in 2007 and it resulted in a recession."
Is this the same apparently incompetent Fed about which you recently wrote:
""The Fed is about the only thing holding up this economy.
You can thank the Fed later."
As Thomas Jefferson wrote: "Indeed, I tremble for my country..."
kmg"I can't believe that a person actually makes a sweeping statement that fruits and vegetables are 'dangerous to eat' but processed meats are not, based on one anecdote."
LOL
Yeah, there's a veritable epidemic of sweeping statements being made around here.
Here's another one:
"Americans who complain about food prices are not really eating food, but rather food-like substances.
No wonder they are obese and unhealthy. "
Ron, do you see a contradiction in those two statements about the Fed?
The Fed works in the future economy, because of lags in the adjustment process.
Does that make the Fed incompetent?
The chart shows the CPI less food and energy is much less volatile than the all items CPI:
http://data.bls.gov/pdq/SurveyOutputServlet?request_action=wh&graph_name=CU_cpibrief
"I can't believe that a person actually makes a sweeping statement that fruits and vegetables are 'dangerous to eat' but processed meats are not, based on one anecdote"...
LOL!
I can't believe you fell for it kmg...
I dinged ron h also...
Short of food, any kind of food being irradiated what doesn't carry the possibility at one time or another of being tainted with food poison?
Ron H,
"Americans who complain about food prices are not really eating food, but rather food-like substances.
er.... read some Michael Pollan or other nutritional expert. The concept of food vs. 'food-like substances' is an important one.
No wonder they are obese and unhealthy.
Are you actually claiming that America does not have an obesity problem, and that the majority of Americans have bad diets.
You need to get out more.
kmg: "er.... read some Michael Pollan or other nutritional expert. The concept of food vs. 'food-like substances' is an important one.
Are you actually claiming that America does not have an obesity problem, and that the majority of Americans have bad diets."
My comment wasn't about food.
What I'm actually claiming is that you put your foot in your mouth when you made a sweeping general statement about food prices and what people eat, then rudely criticized juandos's for making a sweeping statement.
Pot kettle black.
You might want to reread your own comments before impugning others.
How does that foot taste?
Peak: "Ron, do you see a contradiction in those two statements about the Fed?"
Not a contradiction, but perhaps "irrational exuberance" about their competence.
You previously claimed the Fed was the only thing holding up the US economy, and now you accuse them of miscalculating inflation in 2007, and pursued monetary policies that drove the economy into a ditch.
That doesn't inspire confidence in a group of financial geniuses whose only job is to moderate inflation.
kmg: "er.... read some Michael Pollan or other nutritional expert. The concept of food vs. 'food-like substances' is an important one.
Are you actually claiming that America does not have an obesity problem, and that the majority of Americans have bad diets."
My comment wasn't about food.
What I'm actually claiming is that you put your foot in your mouth when you made a sweeping general statement about food prices and what people eat, then rudely criticized juandos's for making a sweeping statement.
Pot kettle black.
You might want to reread your own comments before impugning others.
How does that foot taste?
Ron, I don't know why the Fed doesn't inspire confidence in you.
It takes a great deal of ability to anticipate the future economy correctly and smooth-out business cycles successfully.
I guess, some people are easily duped into believing it's the Fed's fault.
I never said the Fed "drove the economy into a ditch."
The Fed was somewhat behind the curve easing the money supply in 2007.
Nonetheless, the country was on the path to a mild recession, until Lehman failed in Sep '08.
The financial crisis wasn't the result of monetary policy, it was the result of policies by politicians.
The Fed is in a tough position. It has to facilitate economic growth and maintain price stability, while politicians tend to reduce growth and create inflation.
"It takes a great deal of ability to anticipate the future economy correctly and smooth-out business cycles successfully."
that's your answer. the fed does not have that ability and has proven it over and over. arguably, no one does.
have you read their transcripts predicting a soft landing in housing back in 2007?
hardly confidence inspiring.
Bart, are you saying all food rose over 4% in a linear line?
I said that food prices are up 4% since a year ago, *after* geometric and hedonic fiddling and before reverse hedonics are applied, etc.
You're welcome to cite any actual specifics and facts that cover the entire country that show food price increases to be substantially below 4%.
You're also welcome to continue your attempts to muddy the waters with strange phrases like "in a linear line".
Found anyone who has been on Social Security alone for a few years whose standard of living hasn't decreased?... ooops...
Peak: "Ron, I don't know why the Fed doesn't inspire confidence in you."
LOL
OMG, I don't know how to respond to that. Words fail me.
"It takes a great deal of ability to anticipate the future economy correctly and smooth-out business cycles successfully."
Yes. It takes abilities that mere mortals don't possess, yet the FED and their supporters pretend to have them.
Central planning doesn't work, Peak, There's evidence all around you.
"I guess, some people are easily duped into believing it's the Fed's fault."
Or that it's not.
"I never said the Fed "drove the economy into a ditch."
No, I said that. You said they caused a recession.
Reread your own words, then think about what you have said.
The Fed, whose only job is to pretend to control inflation using the several blunt instruments at their disposal, incorrectly forecast the future in 2007 - surprise, surprise - and caused tremendous damage to millions of people, and destroyed $trillions in wealth.
"Ooopsy!" says Peak "Nonetheless, they are our last best hope. The Fed is about the only thing holding up this economy."
That notion should really scare you. I know it scares me.
"The Fed was somewhat behind the curve easing the money supply in 2007."
How can that happen? Aren't they the experts? If they can make such colossal mistakes, why should the Fed even exist? Perhaps the invisible hand would do a better job.
"The financial crisis wasn't the result of monetary policy, it was the result of policies by politicians."
It was both.
"The Fed is in a tough position."
LOL. I'll say! an impossible position. Remember, central planning doesn't work.
"It has to facilitate economic growth..."
If left alone, economic growth will facilitate itself. There's no evidence that the Fed does a better job than the market, in fact there's lots of evidence to the contrary.
"...and maintain price stability..."
That's an impossible task. Prices don't change in lockstep., and why is it even desirable that prices stay the same over time, when the natural tendency would be for prices to decrease?
"while politicians tend to reduce growth and create inflation."
I certainly won't defend politicians, and I agree they can hinder growth, but overall inflation can't occur without an increase in the money supply. thart's the province of your buddies at the Fed.
Either end the Fed or end politicians ...or both!
the key problem IS the dual mandate.
maintaining price stability is possible and effective. the bundesbank showed us that. one, simple mandate.
if you add in "full employment" or "growth" now you have conflicting mandates that require a lot more prescience to try to manage.
inevitably, you get disaster, especially if politicians are pushing you to "create jobs".
the dual mandate fed model is a terrible failure ans always will be. no one is smart or foresighted enough to make it work.
we need an independent fed (as opposed to the political lickspittles we have today) with ONE mandate - inflation targeting.
volcker did wonders for the US like that.
it's a simple, proven model. it is long past time to get back to it.
Bart says: "...attempts to muddy the waters with strange phrases like "in a linear line"."
More than two dimensions are too much for some.
Perhaps, Americans are buying higher quality food, because of higher income?
So, what's really the food inflation rate?
Ron, your only statement I agree with is: "There's evidence all around you."
Let me know when you find some.
The economic literature clearly shows monetary policy has been effective in smoothing-out business cycles.
U.S. living standards improved at a faster rate, since the Great Depression, in large part, because of the Fed smoothing-out business cycles, to keep resources more employed.
The Fed has done its part to maximize economic growth and maintain price stability in this 21st century-style depression.
Now, it's up to the government to deregulate, cut spending, and cut taxes to unshackle the potential of the greatest economy the world has ever seen.
Peak: "Ron, your only statement I agree with is: "There's evidence all around you."
Let me know when you find some."
Evidence that central planning doesn't work?
Hmmm. Let's see:
- Former soviet Union
- Cuba
- North Korea
- Venezuela
- Nixon's wage & price controls
- Original Plymouth Colony
- Jamestown Colony
- ...
How many do you need?
"Bart says: "...attempts to muddy the waters with strange phrases like "in a linear line"."
More than two dimensions are too much for some."
And some have trouble counting dimensions. :)
"Perhaps, Americans are buying higher quality food, because of higher income?"
Perhaps? What evidence do you have for that? ARE incomes higher? You've just been arguing for substitution and buying things on sale, for which the time spent searching is a cost in itself.
"So, what's really the food inflation rate"
The exact number? It's only a statistic, Peak, a mildly interesting artifact. It has little meaning to individuals, who are mostly interested in what has happened to their own food budget, and what people on this thread are telling you is that for many people, food inflation is significant and worrisome.
You can't tell them they're wrong by handing them a shiny number that says otherwise.
Post a Comment
<< Home