One of the hardest concepts for Principles students, politicians and pundits, oh heck, just about everyone to fully grasp is inflation. A big part of the reason is because inflation is an abstract concept that is not directly measurable. We can conceive of it, but we can't measure it. I'm no physicist (and open to … Continue reading Yes, Inflation/Deflation is Hard to Measure
John Stossel Fails an Education Test and Demonstrates That He’s Economically Illiterate
John Stossel is a Fox Business News reporter. Stossel is an unabashed "libertarian" with a strong Austrian orientation on economics who focuses on economic issues. He's made a living out of being indignant and disgusted by "liberals" and "big government" which he sees as the root of all economic problems. He's been quite successful over … Continue reading John Stossel Fails an Education Test and Demonstrates That He’s Economically Illiterate
CPI: Deflation Watch
The September Consumer Price Index numbers are out. Inflation is really a sustained general increase in the level of all prices. Since the price index itself can be rather noisy, varying a lot from month-to-month, many economists use some different techniques to smooth out the trend to see what the "sustained" action really is. Three … Continue reading CPI: Deflation Watch
CPI: What Inflation?
The anti-stimulus types who have been apoplectic about the FedGov Deficit warned us higher inflation, if not hyper-inflation would be just months away. That was last year. Let's look at the data: From the BLS report on the Consumer Price Index on Sept 17: The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 … Continue reading CPI: What Inflation?
Inflation or Deflation? Look at Data
For nearly two years now the neoclassical, quantity-of-money-theory inspired folks have been fearing inflation. Inflation, it has been said, was the necessary end result of the government deficits and central bank bailout efforts that helped keep the Great Recession from turning into Great Depression 2.0. Let's look at the data: Click on graph for larger … Continue reading Inflation or Deflation? Look at Data
Explanation: “Core Inflation”
Krugman explains "core inflation" and the measurement thereof: So: core inflation is usually measured by taking food and energy out of the price index; but there are alternative measures, like trimmed-mean and median inflation, which are getting increasing attention. First, let me clear up a couple of misconceptions. Core inflation is not used for things … Continue reading Explanation: “Core Inflation”
CPI and Velocity of Money data for January indicate deflation worry
From Angry Bear: Beginning of the year economic blues in the US? I think so. Just looking over Spencer's CPI post; here is an excerpt (the first paragraph): The CPI report was encouraging. The total CPI rose 0.2% and the year over year increase is only 2.6%. Although real average hourly earnings fell, real weekly … Continue reading CPI and Velocity of Money data for January indicate deflation worry