Cost of goods/services

[sickboy]

Should have added that the lower class wages is what I was talking about, more reason to get a college education. Without it, you can't really sell yourself to do anything unless you have LOTS of experience. But people right out of high school would rather rack up their credit cards with HD TVS, brand new computers, etc instead of making the sacrifice to spend that money on college. I think only 35% of the population has a bachelor's degree (that figure might have fluctuated a little since the last time I checked).

 

[stdreb27]

Originally Posted by sickboy
http:///forum/post/2736516
You know, I'm an economics major, and rising prices have never been a problem before because our economy, and therefore the wage rates, have increased with them. But things are different lately, our economy is currently stagnant (as anyone who holds investments that aren't energy related could tell you) and we are losing jobs which means we don't have to pay a higher wage rate to get employees. If "real" wages had actually been increasing over the last 20 or so years, the prices wouldn't actually be a problem.
There are lots of reasons for the increases inflation. But you can with some algebra loosely say percentage change in Inflation= percentage change in the Money supply.
And with the fed playing fast and loose with the money supply I am not suprised in the least bit the inflation number we've seen. IMO this has been masked a little bit by the lows in the American Dollar vs some other currencies. But with the recent resurgence, and the actions of the fed over the last year finally filtering into the market, I wouldn't be suprised to see those numbers stay a little higher than normal.
Every time you see the Fed bailing out a bank, that means inflation is going to be going up... B/C they are basically printing money to bail em out...
Another thing I put alot of stock in is the energy prices. I think that has influenced prices more than their "models" anticipated. And now that it has filtered into the market one of the reasons we are seeing higher inflation numbers. But the last time I saw a bls release of core CPI. It was pretty low, for the month around .3%.
And the increase in wage earners (non-farm) was around .5%. Increasing from a year ago. If we could get our energy act together and increase the supply of energy, I think we'd be in VERY good shape.
The Consumer Price Index for Urban Wage Earners and Clerical Workers
(CPI-W) increased 0.5 percent in July, prior to seasonal adjustment. The
July level of 216.304 (1982-84=100) was 6.2 percent higher than in July
2007.
http://www.bls.gov/news.release/cpi.nr0.htm
Toss energy and food into the mix and then you see some ugly numbers.

 

[sickboy]

Yeah, energy and food are the big pushers and people like to take them out of the equation....but what are the two things we need the most? Energy and food. I agree with increasing the supply of energy, I have seen several reports that say that the only reason we are paying 3.50+ for gas is speculation in the oil markets. When Bush said he took the executive ban off of off-shore drilling oil noise dived even though nothing happened (executive ban lift didn't start drilling). Here in Nebraska I hear all about crop prices all of the time at it is amazing how corn was $2 a bushel for like a decade, then it went to $4, then to $7. I think it is back to about $4, but that, and energy to get the food to the animals, increases the price of beef, pork, chicken, etc.
As for bailing out banks, that is stupid. You can't say we believe in market forces and then bail things out. That is a contradiction. If the market forces say you fail, you fail. And with the issue of fanny and freddy, they should have never privatized part of it. Of course people are going to make bad loans trying to make more money because if we fail, the government owns part of it.
This is one of the only threads in The Aquarium that I'm actually enjoying! Keep up the dialog! We need more of this and less fighting in this country!

 

[stdreb27]

Originally Posted by sickboy
http:///forum/post/2737037
Yeah, energy and food are the big pushers and people like to take them out of the equation....but what are the two things we need the most? Energy and food. I agree with increasing the supply of energy, I have seen several reports that say that the only reason we are paying 3.50+ for gas is speculation in the oil markets. When Bush said he took the executive ban off of off-shore drilling oil noise dived even though nothing happened (executive ban lift didn't start drilling). Here in Nebraska I hear all about crop prices all of the time at it is amazing how corn was $2 a bushel for like a decade, then it went to $4, then to $7. I think it is back to about $4, but that, and energy to get the food to the animals, increases the price of beef, pork, chicken, etc.
As for bailing out banks, that is stupid. You can't say we believe in market forces and then bail things out. That is a contradiction. If the market forces say you fail, you fail. And with the issue of fanny and freddy, they should have never privatized part of it. Of course people are going to make bad loans trying to make more money because if we fail, the government owns part of it.
This is one of the only threads in The Aquarium that I'm actually enjoying! Keep up the dialog! We need more of this and less fighting in this country!

The reason they take those out is because they are sooo volatile, you could have energy prices go up by 100% and it not be a good indicator of the health of the marketplace overall. Maybe their was a hurricane in the gulf. Then you have possibly have double counted the influence over inflating what would be actual number.
Freddy and Fanny imo basically forced out by underbidding companies who purchased those loans. This quasi-government entities created a price ceiling with almost unlimited supply, so prices on loans went down. And the caution went to the wind, since the actual risk taker wasn't approving the loans. someone else was whose business model was setup with basically a guaranteed buyer. Hence the insulation of risk. And a market failure.