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Old 08-10-2008, 05:52 PM   #61
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7% profit is a killing???

should we then CRUCIFY manufacturers of soda, beer, pharm drugs, candy, toys, etc whose profit margins exceed 7%?

at least most of us NEED fuel. most of us do NOT need these products.
Back when I was in retail, if I was only making a 7% profit, my district manager would have been on the phone with me asking why!
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Old 08-10-2008, 07:41 PM   #62
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. . It was an attempt to dampen inflation, which was running at an incredible 4%. It had peaked at an astounding 6% the previous year.
I wonder what inflation really is today using the same benchmarks? We are technically not in a recession because our GDP continues to grow at a slow rate, but comparing that to the real rate of inflation for consumable goods, we've been on a downhill slide for years now.
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Old 08-10-2008, 10:15 PM   #63
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I wonder what inflation really is today using the same benchmarks? We are technically not in a recession because our GDP continues to grow at a slow rate, but comparing that to the real rate of inflation for consumable goods, we've been on a downhill slide for years now.
Probably a hell of a lot more than it was in '71. Of course, IIRC (and I may be wrong on this), when the cost of living is computed for COLAs, they tend to back out the costs of food and energy...
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Old 08-11-2008, 06:41 AM   #64
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I would argue that there are really two different rates of inflation. The first one which the federal government considers, accounting primarily for the cost of non-consumeable goods and items that are not hard necessity, and the second one which is the real rate that those of us near the bottom are forced to contend with for mere survival.

The two rates are related to some degree, but as somebody already mentioned, the former tends to lag the latter significantly. So while the government reported rate continues to appear marginal, the rate for necessities will eventually push that figure up as consumers ability to pay for goods, and subsequently, demand declines.

So in a nutshell I think it boils down to this: If oil prices do not recede significantly very soon, our economy is going to be stuck with a rate of inflation for all goods that will parallel the precipitous climb of oil. And while the oil bubble may eventually break, we will still be left with the remnants of a devalued currency and expensive goods which will stagnate in pricing for several years until economies are able to improve and stimulate significant demand again.

Price controls are not the answer ever so long as costs are not similarly controlled - and we cannot tell OPEC what to charge us, nor how much the oil companies will have to pay to get other oil out of the ground. Demand control is the only thing that works, and that has to come from the individuals who use the product.

When is the last time you biked to work? To the store? To the park?
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Old 08-11-2008, 07:52 AM   #65
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I would argue that there are really two different rates of inflation.
100% right Snax.

Economists tend to talk about "Top line inflation" (i.e. total inflation) and "bottom line inflation" (i.e. inflation, removing the effects of housing and energy).

The reason that they consider only "bottom line" inflation is that those will eventually effect top-line inflation (i.e. more expensive energy will filter through the economy and make everything else more expensive), so the measurement is kinda "double-dipping" from a statistical perspective.

While that's very nice for economists, us average guys trying to pull our own weight to survive definitely are most effected by top-line.

We used to be able to support the American trade deficit (since a large component was for oil), but with the death of the American Manufacturing sector (and everyone who supported it), the US can no longer sustain itself. We cannot support ourselves, the Middle East, *and* China. And of course we should be smarter about our consumption as well, and not drive wasteful SUVs and so on.

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Old 08-11-2008, 08:40 AM   #66
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Regarding inflation vs Consumer Price Index as computed by the Bureau of Labor Statistics - the way that index is computed was revised during Clinton administration and had an effect of lowering reported inflation rate.



In the 90's BLS introduced things like: Substitution (if beef goes up, people must be switching to chicken), Hedonics adjustment (a new model of car cost more, but it's value must be higher due to design improvement); Geometric weighting (whatever goes in prices gets reduced weighting in the index). This article does a good job explaining what happened, and how the current CPI understates inflation:

http://www.shadowstats.com/article/56

So inflation is understated to keep down Cost Of Living adjustments, reduce Social Security payments, and lower borrowing costs for the government. If this trend of increasing inflation continues - people here and around the world loose faith in the dollar, and we'll end up in hyper-inflationary depression, probably around 2010-2011 time frame.
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Old 03-12-2009, 12:57 PM   #67
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I stumbled across an interesting website. www.auffpc.com The Pac is planning on having a massive mailing to Wahington with a twist. They want for every member to mail an identical letter with one tea bag included in the envelope. They are calling it the Washington Tea Party.

This is by far the most interesting plan of action that I have heard in a while. I cant wait to be apart of something that could be the turning factor of our economy. If you have a minute check out thier site.

www.auffpc.com
just wanted to bring this up again for a different reason. i think we should send a tea bag and a letter disapproving of bailouts, dark and unread bills, increased taxes, broken promises, etc.
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Old 03-12-2009, 02:21 PM   #68
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Hell the politicians will just be drinking free tea off of the tax payers for the next five years if we do.
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Old 03-12-2009, 08:32 PM   #69
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Well as much as I disagree with the path that got us to bailouts, I believe that they are now a necessary evil. These banks NEVER should have been allowed to rise to the status of 'too big to fail', but in practical terms, they really are - at least to fail all at once. And that is the crux of it, staving off sudden financial collapse that would infuse total chaos into the stock markets and the world economy.

It's like lowering 100 lbs. of meat into a lions den at the zoo. No matter how you do it, that meat is going to be taken care of, but drop it too fast and you risk killing some lions.

And don't be fooled by the temporary profits suggested by Citibank and the bump in the market it has provided. We have a LONG way to go before the meat hits the floor on that one.
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