- This topic has 8 replies, 7 voices, and was last updated 18 years, 2 months ago by Diego Mamani.
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August 11, 2006 at 9:15 AM #7173August 11, 2006 at 11:05 AM #31705powaysellerParticipant
You are right about rising rents causing the CPI to rise, because rents are 30 or 40% of CPI.
But rents cannot rise above wages. Despite what landlords ask… More people are moving out of SD, so I think rents will drop by next year. people in NOD will leave SD also.
I think the Fed has to give up on fighting inflation. They disappointed me by giving a pause. This shows they are NOT serious about inflation at all.
Perhaps, as someone else noted, this fact of being easy on inflation is to blame for the low interest in Treasuries this week. Who wants to keep buying dollars if their value is inflated away by a Fed not serious about fighting inflation and keeping the dollar strong?
I wouldn’t be surprised if they do all kinds of tricks to fool us into thinking inflation is lower. Removing rents from CPI, and replacing it with housing prices, seems like a very good way to do it. Any chance they can get away with that?
August 11, 2006 at 12:28 PM #31717DanielParticipantPowayseller,
There is not a chance they will substitute house prices for rents in the CPI. It doesn’t make any economic sense to include asset prices in the CPI (only goods and services are allowed, and rent IS a service).
Mark my words: if they ever do that, I will publicly retract the above statement, and buy everyone at Piggington a drink. And yeah, I’ll also move all of my assets out of the dollar.
August 11, 2006 at 1:00 PM #31718MonsterParticipanthttp://www.bls.gov/bls/fesacp1120905.pdf
http://www.bls.gov is the oficial cpi website with all the numbers you ever wanted to study. Better grab a bottle of red for this reading.
Here is all the info. you need regarding the rental index in the CPI number. Yes, the Fed. should of tightened. Chasing inflation is harder than crushing it.
August 11, 2006 at 1:14 PM #31719barnaby33ParticipantYeah you could move your assets out of dollars, assuming you had any left at that point.
Josh
August 11, 2006 at 1:46 PM #31726DanielParticipantAre drinks for Piggington folks so expensive???
August 11, 2006 at 3:36 PM #31750powaysellerParticipantbarbaby and jepsd and theplayers:
when I tell people I want to buy other currencies, they say I should hold only dollars because that is the currency I will be using here. Isn’t it better to trade some euros back into dollars each month, as I need dollars? Comments?
August 11, 2006 at 4:02 PM #31758bubba99ParticipantEuros are doing very well against the dollar. In January one euro would buy 1.20 US dollars. Today it will buy 1.29 US dollars. Or all else being equal, you get 9 cents more per euro today than in January.
August 11, 2006 at 5:19 PM #31768Diego MamaniParticipantIt makes sense to have some of your funds in euros or swiss francs, for diversification purposes. But keep in mind the transaction costs that you will incurr, especially if you want to trade often, or convert a few euros into dollars every month. The bid-ask spread is not negligible, and your financial institution will likely impose fees on top of that. There are fees for transferring money in and out of your account, plus fees for convertng foreign currency. And because of the bid-ask spread, you will start in the red (at a loss).
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