The Madness of Bill Gross

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take a look at www.shadowstats.com this guy values the cpi the old way and tells what happened in the various administrations to change it to what you see today

jaimeroid of NE 8:22AM June 05, 2008

I agree that they cut rates too much, but I think they do it, not for political reasons, but for having their economic legacy tainted. Maybe that might be political in and of itself.

Chris of AZ 7:16PM June 04, 2008

Chris, even you have noticed that the Federal Reserve went too far the wrong way cutting interest rates. They may excuse themselves, or state that they don't have to "justify" anything to us mere mortals, but no one at the Fed is dunce enough to "believe" that inflation is over-stated. They cut rates for political reasons and, in part, because they are SCARED of a meltdown on their watch.

Daniel David of 3:54PM May 29, 2008

Daniel David, trying to base inflation on the rise in postage (a rate arbitrarily set by the Feds), a hospital day (which are not even set by market pricing), a nursing home month (also not set by market pricing), then a statistic that you don't believe is honest, would be even less honest. Yes, the CPI is not an accurate statistic, but until economists come up with a better way to measure inflation (and not based on the things you presented), the CPI is what we have. By the way, the CPI does try as much as possible to compare "apples to apples" goods and services.
If the Fed believes that inflation is "overstated" that can at least give some reason as to why they are still cutting interest rates. However, I think other factors (weak dollar, increasing commodity prices) should start forcing the Fed to rethink its rate policy and start looking at increasing rates.

Chris of AZ 11:02AM May 29, 2008

Daniel David, trying to base inflation on the rise in postage (a rate arbitrarily set by the Feds), a hospital day (which are not even set by market pricing), a nursing home month (also not set by market pricing), then a statistic that you don't believe is honest, would be even less honest. Yes, the CPI is not an accurate statistic, but until economists come up with a better way to measure inflation (and not based on the things you presented), the CPI is what we have. By the way, the CPI does try as much as possible to compare "apples to apples" goods and services.
If the Fed believes that inflation is "overstated" that can at least give some reason as to why they are still cutting interest rates. However, I think other factors (weak dollar, increasing commodity prices) should start forcing the Fed to rethink its rate policy and start looking at increasing rates.

Chris of AZ 11:01AM May 29, 2008

While he may be well-known and sought after, Mr. Gross isn't much of a prognasticator. He appeared on a CNBC show in early July 2007 when the 10-yr. Treasury Bond was at 5.25%. He proclaimed that the Fed would begin to raise the Fed Funds rate anew at its August meeting and people should sell the 10-yr Treasury Bond because the economy was running too strong and it's yield would rise to close to 6% by the early fall of 2007. Well, he wasn't too far off, was he....?

marty f of NJ 6:00PM May 28, 2008

One only needs to realize that the CPI can be completely manipulated (and indefinitely) with product substitutions and somebody's personal estimate about how much supposedly "better" a TV, a computer or a car is today compared to similar items of a few years back.
We should be measuring "inflation" solely on a basket of apples to apples goods and services.
A postage stamp, a college credit hour, a hospital day, a gallon of gas, a pound of oatmeal, a dozen eggs, a 16oz bottle of water, a nursing home month, a pair of jeans, a stick of gum, a therm of natural gas, an ounce of gold. Some things really don't change much, and oddly most all are running upwards more than 2% a year and have been all along (although some in erratic "spurts").
As for stocks and bonds both being improperly over-valued, probably they are.
We recently learned that houses as "investments" were over-valued and there may be more lessons coming if we insist on honest government statistics.

Daniel David of NM 4:43PM May 28, 2008