Ohio miners forced to attend Romney rally without pay...

[kandrathe]

Then you have your model of example wrong. I have never seen a real world example where next years model computer is twice as fast, for an increased price.

It's just an example. Ok, say the price stays exactly the same for the almost the same model of Dell WTF9000. If the GFLOPS increased 10% between the models -- the government would call that a price decrease since I'm buying more computing power with the same dollars.

What he could get for 500$ in 2012, is incredible compared to what 500$ would get you in 1990. Jester already said it, and it's not hard to prove.

I'm not disputing that. For all practical purpose, it doesn't matter for people if the power increases, as long as the machine is adequate for the task at hand. For your application, it probably matters -- for 90-99% of computer users it does not matter. There is little increased utility in word processing, spreadsheets, and other common applications than from those 10, or even 20 years ago. Now, connectivity and the ubiquitousness of the Internet are another matter.

Why you continue with a frankly bizarre theory of overall computer tech price increase that has never happened yet, is again. Bizarre. We're not talking about blips that temporarily does a price change with components like RAM.

The first gen DVD player we got was valued at 200$+. Regular, Blue ray didn't come in the market yet. Some years later a regular DVD player were 30-60$ at Sprawlmart. We can kvetch that well the movies story quality doesn't change much.

A better item for our basket of goods. The inflation calculation people wouldn't care too much about rating the quality of the movie, but perhaps if the data density were higher -- HD versus normal. If a movie is offered on HD DVD for $50, but last year the same movie was sold on non-HD for $25 they would want to factor in the HD-ness as a technological improvement.

In the world of computing for example, there are no ball peens offered for sale, only 10 ton hammers for $1000 in today's dollars. If computers were just like other tools, then I'd be able to buy a new Apple II equivalent for pennies. They are collectible now, so they actually sell on Ebay for $30 - $150 depending on condition.

The bottom line is that when you and I go to the store, the store is selling today's merchandise which is a percentage higher in price than it was last year. The government says that number is about 3% (the inflation rate) -- but in our experience we find it's more like 10% -- why? Part of the reason is that the government is trying to factor in the improvement of the product in our pricing. Jester thinks that is fine and I don't.

Part of my argument is that increased utility is not always a purchasing decision, and often we are no longer offered the product just sufficient to meet our needs. The other reasons are regionality, and seasonality -- both factors excised by the blanket inflation rate number. Used cars cost more in northern climates because we are harder on our cars. Housing costs vary much by locality based on supply and demand. If the price of citrus spikes upwards in winter, people in California, and Florida will experience much less than is felt elsewhere since they are closer to the supply. If you lived near apple producing regions, the product would be more accessible and cheaper than for people living in Hawaii (where the price of everything is linked to the costs of shipping ).

Nobody buys the average basket of goods that constitutes the CPI -- and I feel the methodology is suspect as compared to the reality of most peoples annual purchasing decisions and price experience.

Now, why does this matter? The government uses the CPI to index things like Social Security payments -- and most employers use it as a guide how much a base raise should be to keep the worker from becoming disgruntled. So, not only is the payout rate national (where cost of living varies by locality) any inflation adjustments to your social security pension are also national, and also not based on your local experience. This causes problems for our older people on fixed pensions in a couple ways; first, they find they cannot afford to live where they have lived their entire lives and so are forced to move to areas that are cheaper. Second, if they cannot move, then they are increasingly more, and more destitute. Third, the elderly consume differently (more health care, and more expensive housing) and so their program indexes should reflect their spending habit, and not mine.

So, not only do I think that the government lies about the rate to make themselves look like they are doing a good job, I think they actively avoid increased costs to social programs that are indexed to inflation. You know I'm not a social spending guy. But, it is just *wrong* to hurt people this way.

Consider (this article from 2003); http://www.newyorkfed.org/research/curre.../ci9-5.pdf

"Some argue that social security benefits should be adjusted using a price index that reflects the
spending habits of the elderly rather than those of workers. This study suggests that if such an
index were adopted today, over the next forty years benefit levels would increase and the social
security trust fund could become insolvent up to five years sooner than projected."