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Well, Bennie and the Inkjets Say Inflation is No Big Deal

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May 28, 2008 – Comments (8)

So pay no attention to stuff like this:

Dow Chemical to raise prices up to 20 percent, blasts Washington for 'true energy crisis'

MIDLAND, Mich. (AP) -- Dow Chemical Co. will raise product prices by up to 20 percent almost immediately to offset the soaring cost of energy and raw materials, and the CEO of the chemical giant lashed out Washington on Wednesday for failing to develop a sound energy policy.Interesting that Dow is whining about this now. Here's its 2006 record on political palm-greasing. 2004. 2002. For 2008, it's redirecting money to the Democrats. Guess its hoping that higher gas mileage, solar, etc. will leave behind more petrol for chemical feedstocks. That's Charlie Munger's take on things, too.

8 Comments – Post Your Own

#1) On May 28, 2008 at 1:31 PM, saunafool (98.77) wrote:

I can't remember where I saw the chart, but if we measured inflation the same way we did in 1983, it would be running at 11%. If we did it the same way as we did before 1998, it would be 7.5% or so.

But, of course, that would be bad for all the government entitlements that we already can't afford which are indexed to the CPI. So, they took the CPI to a secret interrogation center, simulated drowning repeatedly, until the new, improved, "more accurate" CPI now says inflation is a mere 3.5%.

This is how it works. Price of beef goes up, eat chicken. Price of chicken goes up, eat tofu. Price of tofu goes up, eat dogfood. Gotta buy a car, dishwasher, refrigerator, or computer? Because todays items are so much more powerful than what you bought 10 years ago, you are actually paying less and less, even though the amount out of your pocket goes up and up.

Medical and education prices rising? Absolutely not. The care and education you receive are so far superior that the value delivered more than exceeds the cost increase. Therefore, even though you have less money, you have received greater value and prices are down.

Oh yeah, and food and energy costs don't count. Just don't eat or drive. 

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#2) On May 28, 2008 at 1:34 PM, saunafool (98.77) wrote:

Oh yeah, and company I've worked with, and every company my wife has worked with has been raising prices like crazy over the past 5 years. Multiple 5% increases in a year. Three increases of more than 10% in an 18 month period.

But, there is no inflation.

In the new CPI, if the price of everything goes up, just don't buy anything. No inflation. You have a choice, people! 

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#3) On May 28, 2008 at 2:27 PM, EScroogeJr (< 20) wrote:

"Oh yeah, and food and energy costs don't count. Just don't eat or drive. "

No, the new food has a higher calory content, the new oil is more, well, oily, and the best part of it all, the new dollars are less valuable to you as a consumer and easier to part with. So you're paying less :) 

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#4) On May 28, 2008 at 2:54 PM, cubanstockpicker (20.58) wrote:

well saunafool I agree with you but the buck stops on dog food.

Unless its Beneful, I saw a commercial yesterday and the dogfood actually looked like a can of chunky soup. DELICIOUS!!

Bent, nice post again. 

I am starting to conclude that it isnt best to run against the hedge funds pouring huge wads of money betting on ags and softs. Everyone is starting to get into commodities without understand the long term global impact of how bad it is having middlemen with enourmous pockets creating more of a a difference from what the actual price for ags and other softs from what should be the price. I hope they lose their ass and betting against their greed. We are offically in commodity greed mode.

The big problem with energy in the US is a blatant double standard. We stopped making nuke plants 30+ years ago, we stopped drilling for oil in relatively safe proposals, it takes 5 years to get approval for a more than safe pipeline in Questars case. Not even The Kennedy's, who are suppose to be the green guys didnt want a wind farm to spoil theyre view at the Hampton's. And instead of the US raising prices on oil by taxes and using the money to come up with renewable resources or high speed trains, buses etc or stopping the oil subsidies we did the same stupid thing over and over again and expected a positive result.

 

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#5) On May 28, 2008 at 3:12 PM, Nainara (< 20) wrote:

You people and your imaginary inflation. CPI conspiracy theorists, one and all. There is no inflation. Prices are just rising because... because of evil speculators. Yes, and because the rest of the world is envious of our freedom.

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#6) On May 28, 2008 at 3:33 PM, devoish (98.59) wrote:

This is how it works. Price of beef goes up, eat chicken. Price of chicken goes up, eat tofu. Price of tofu goes up, eat dogfood.

Price to evaluate a mortgage goes up, quantify it. Price to fight a legal battle goes up, settle it. Price to own a car goes up, lease it. Price to honor your obligations go up, default.

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#7) On May 28, 2008 at 4:12 PM, TDRH (99.66) wrote:

saunafool, not promoting this sites subscription content, but the cover graph gives some indication.

 http://www.shadowstats.com/

Pretty sure they are worried about inflation, but in their minds  they are trying to avoid a financial collapse.

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#8) On May 28, 2008 at 8:57 PM, TMFBent (99.82) wrote:

 they are trying to avoid a financial collapse.

I think they're trying to avoid any kind of financial situation that isn't "everything goes up... always."

Except, of course, for real wages for the masses.

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