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Saturday, July 14, 2007

More on real inflation figures via iTulip

Further to my post of 9 July re "real" inflation, I have received the following comment from the originator of the charts - thanks.

I am the author of the charts referenced above. For the latest, see here:

FYI, thru today 7/12 for the Real Dow, and thru 2007 Q1 (= mid-Feb 2007) for Real Homes: Real Dow is 2.24x the +1.64 %/yr curve, which is a 55% drop thereto, and Real Homes national (green points) is 1.78x the ca. 54 level, which is a 44% drop thereto.

1 comment:

Pier said...

The graphs given by Mr. Mystery at The Compelling DOW are pretty yet bogus.


The equalizing factor used as the denominator, the Consumer Price Index (CPI), is a bogus measure.

And why is this?

[1] the government agency responsible for CPI changes its definition to suit political purposes

[2] even if the truth of [1] did not exist, goods made in any past time are not the same goods made today.

[3] in any past, humans valued various goods based upon their then situation, e.g., today, listening to music is higher valued (price * units sold) than learning to play a musical instrument

At any moment in past time, goods making uses different amounts of energy, matter, wit, skills and making-time.

Since the Federal Reserve system, humans have used a meaningless fiat banknote to measure relative values. This faux yardstick of measure has caused many wild errors (recessions and unacknowledged depressions).

To get a true picture, Mr. Mystery must use a fixed value, e.g., the amount of Kilowatt Hours one ounce of gold would buy on January 31, 1912 or September 1, 1971.

An equally bad measure is the DJIA itself. The Dow Jones has changed the index many times -- perhaps for political purposes.

Tax rules have changed, which have distorted NYSE Stock Exchange Casino gamblers perception of payoffs. In other words, a unit of earnings today is not the same as a unit of earnings say, prior to Clinton or prior to Reagan or prior to Carter.