Jimmy Smith wrote:
- quote -

That's been mentioned in the past, for a variety of reasons, CPI is a
very political metric. For example any projection involving Social
Security deficits is tied to it (as are current SS payments). I think
many retirees' true CPIs are greater than the one commonly cited
(insurance, housing, medical), but if Social Security were indexed to a
"senior" CPI then the program would be that much more financially
stressed. Ditto other entitlement programs.

I think the point though is that you need to look at and understand how
CPI is put together and whether it has much meaning to you. There are
regional ones that you can look up in addition to the national one, at
those are probably better. You can also look at it category by category
- someone posted the link to the bls.gov site. If your spending doesn't
look like that then you know CPI might not mean as much to you. But it
is based on surveys of consumers' spending and actual store prices so
it's not just pulled from thin air, it describes the "average" consumer
(who doesn't actually buy those goods, or have 1.9 kids either).

They're working on another price index for seniors (CPI-E) but it's not
published. For now you can look at, say, the medical care component and
see that it's increased at a much faster rate than the overall CPI. Some
of that is covered for the typical retiree, some isn't. And if health
care is a big cost you have or expect to have, you know that a
CPI-indexed investment like I-bonds might not be the best hedge for you.
Maybe you put some money in a mutual fund that owns health care stocks
instead.

-Tad

"Jimmy Smith" <nospam[at]pleaseno.more> wrote in message
news:R7hmc.79504$Uz1.22823[at]bignews3.bellsouth.net...
- quote -

Do you think I know about my taxes and don't look at my pay stub? Many of us
don't have a paycheck deduction for medical insurance. May of us don't have
a flat amount copay either, for that matter. Some of us still have pay for
service medical insurance, for which we have an annual deductible and then
pay a percentage of each service. But even if you have a copay, you are in
charge of these costs because you don't have to run to the doctor every time
you have a hangnail, or wait until something gets really bad and then go to
the emergency room. With a healthy diet and exercise, you can actually have
huge control over your own health (what a concept!)

Elizabeth Richardson

"Jimmy Smith" <nospam[at]pleaseno.more> writes:

- quote -

Not here. The non-profit that I am the treasurer for had its medical
insurance costs go up by 4%. My wife's employer had the same
experience, and in addition to that, the employee share of the health
premiums remained the same.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

In article <C%gmc.79476$Uz1.56740[at]bignews3.bellsouth.net> ,
Jimmy Smith <nospam[at]pleaseno.more> wrote:
- quote -

Most businesses replace their computers on a 3 year basis, home users
on a five year basis. In that sense they are consumed.

"Jimmy Smith" <nospam[at]pleaseno.more> writes:

- quote -

Given the speed at which computing equipment becomes obsolste, calling
a computer purchase a one-time event is rather inaccurate.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

"Elizabeth Richardson" <erichktn[at]worldnet.att.net> wrote in message
news:1Bgmc.42499$Xj6.717980[at]bgtnsc04-news.ops.worldnet.att.net...
- quote -

If you look at what you pay monthly for medical insurance you will find that
either your employer's or your costs are up 15 to 20% this year because it
went up for ALL major companies. Many copays went from $15 to $20. Take a
look at what is coming out of your paycheck. I don't think the public is
fully aware. TV and beer. TV and beer. TV and beer. .................
sports.

Jimmy
- quote -

"Ed Zollars, CPA" <ezollar[at]mindspring.com> wrote in message
news:c7b79c023lg[at]news1.newsguy.com...
- quote -

This CPI-U can be even more out of line than most people realize because
there are two types of inflation and CPI-U only measures one. Many people
are on fixed incomes. Many older people that will not have the option of
going back to work or working more hours. Heck. They most likely wouldn't
be hired in most places anyway. When the interest rates drop, their income
drops. Even if prices stay the same, they experienced a devestating type of
inflation because they lost the ability to buy. They don't call it
inflation because it's the exact opposite. Prices didn't go up, but average
incomes went down. End result to cosumer...... the same.

This is not factored into your broad explanation.

Jimmy
- quote -

"Ron Peterson" <ron[at]shell.core.com> wrote in message
news:109hviik19lcr89[at]corp.supernews.com...
- quote -

You "buy" a computer. You do not "consume" computers on an ongoing basis.
They could double the price of computers and besides the one time pain it
would not impact most households.


- quote -

"Greg Hennessy" <greg.hennessy[at]cox.net> wrote in message
news:c7bbqj$1bd$1[at]tantalus.no-ip.org...
- quote -

The creator of this CPI may have a conflict of interest.....................
no?

"Ed Zollars, CPA" <ezollar[at]mindspring.com> wrote in message
news:c7b79c023lg[at]news1.newsguy.com...
- quote -

Yes. This tax season, did anyone else notice how much federal income taxes
decreased? Also, since I happen to work for a fuel dealership, I'm perhaps
more aware of price changes than the average consumer. Price for RegUnleaded
was $0.20 per gallon more this time last year. To me, this means that fuel
prices have declined in that past year, not increased. My employer has
definitely noticed an increase in medical insurance, but my own medical
expenses have not increased, or in any case, my 20% copay is minimal anyway.
My food expenses have increased in only a minor way. I have noticed the
price of beef is way up, but I choose not to eat beef more than 1-2 times
per month and then a much smaller portion than a year ago. (This is better
for my health, which also affects my medical costs.)

So, do we have control over how inflation affects us personally? I believe
we do have some control, but, as Ed Zollars points out, we particularly have
control over our perception.

Elizabeth Richardson

In article <20040505140716.17108.00000896[at]mb-m13.aol.com> ,
PaulMaf <paulmaf[at]aol.com> wrote:
- quote -

As a philosophical point, I'm not sure that is true. I'm not sure it
is false. What assurance do we have that the CPI measures a "typical"
CPI? Just because it is *ATTEMPTS* do to so doesn't mean it does in
fact do it.

- quote -

would be closer to the published one.

"Jimmy Smith" <nospam[at]pleaseno.more> writes:

- quote -

Actually, the current "real" rate for iBonds (as of 5/1)
is now down to 1%

See
http://www.publicdebt.treas.gov/com/comi0504.htm

In particular:

The 3.39 percent earnings rate for I Bonds bought from May through
October 2004 will apply for the first six months after their
issue. The earnings rate combines the 1.0 percent fixed rate of
return with the 2.38 percent annualized rate of inflation as
measured by the Consumer Price Index for all Urban Consumers
(CPI-U). The CPI-U increased from 185.2 to 187.4 from September
2003 to March 2004, a six-month increase of 1.19 percent.

2.38% is certainly not "less than 2%".

- quote -

Tuition, energy and medical costs have been going up
faster than the _overall_ rate of inflation for a
long time. This is not news.

To learn why the CPI-U might not look like the cost
increases that you, in particular, face, you need to
understand how it's calculated and what it's for.
Start here:

http://www.bls.gov/cpi/cpifaq.htm#Question_1

And note, especially, Question 5:

5. Does the CPI measure my experience with price change?

Not necessarily. It is important to understand that BLS bases the
market baskets and pricing procedures for the CPI-U and CPI-W on
the experience of the relevant average household, not on any
specific family or individual. It is unlikely that your experience
will correspond precisely with either the national indexes or those
for specific cities or regions

If you don't like it, don't buy iBonds.
If you know of any other equally well guaranteed investment
which has a higher rate of return, please let us all know.

--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting

Ron Peterson wrote:

- quote -

I think much of the issue here is one of perception--we tend to
*notice* bad news much more readily than good news. I suppose
that's a useful survival tendency <grin> , since the bad things tend
to be the things you need to adapt to, while the good things can be
left on "autopilot" to take care of themselves.

But that does mean we tend to notice price increases much more
readily than price decreases. So we notice that our medical
premiums have gone up, but don't notice that the price for our
electronics (including computers) have dropped dramatically.

When fuel prices were dropping a while back no one seemed to notice
except for a bit of notice when the IRS reimbursement rate dropped
(many employers' systems weren't set up to handle that one <grin> ,
which actually resulted in a special rule for that year that delayed
the effective date). But everyone has noticed as prices have risen
in recent times.

The key issue is to realize that we do have a tendency to
"overweight" the negatives--and to understand that's why we may
believe that an item such as the CPI-U is more out of line with the
real world than it is (and it likely is--just because the
methodology is one that gets discussed quite a bit, and it may
simply be impossible to design a "truly" representative index).

--
Ed Zollars, CPA
Phoenix, Arizona

Jimmy Smith <nospam[at]pleaseno.more> wrote:

- quote -

Computers 40 years ago were less powerful than your
desktop computer and cost over a million dollars.

You need to change your market basket. Do you need to have a formal
education? If not, there are other alternatives.

--
Ron

"Jimmy Smith" <nospam[at]pleaseno.more> writes:

- quote -

Because you're an atypical consumer.

Read up on the definition of CPI-U and how the government
computes it.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

The current I Bonds sure seem to use an abnormally low "inflation rate" on
which to base their payout. I think it's something like less than 2% with
an interest rate on top of that of 1.1%. My medical costs are going up 15
to 20% per year. My energy costs are going up 10 to 20% per year. Tuition
is going up 12% per year. Food is going up at least 5% per year and so on.
How can the government use such a low inflation rate to figure their I Bond
rate if the "real" inflation is really soooooooooooooooooooooooooooooooooooo
much higher.

Jimmy

"Rich Carreiro" <rlcarr[at]animato.arlington.ma.us> wrote in message
news:uy8o7hus2.fsf[at]animato.arlington.ma.us...
- quote -

I wish that my consumption was atypical, because if it was I would alter it,
but most of us mostly pay for medical, food and fuel for vehicles and homes
and business and various insurances. My statements encompass most consumers
when it comes to the real inflation experienced in the marketplace.
Experienced inflation seems MUCH higher than stated inflation.


Jimmy

- quote -