How can you possibly have too many reserves? You would think that the more reserves the healthier the institution and so there would be no such thing as "excess reserves". We've mentioned this in previous articles such as FED Looks for New Ways to Crank Up Money Supply and How “Excess Reserves” and the Money Multiplier Could Trigger Inflation but excess reserves are in the news once again as Philadelphia Federal Reserve Bank President Charles Plosser says that that "excess reserves" could push inflation dramatically higher. Well, we have been telling you that for quite some time so it shouldn't be news to long time readers. But if you are new to InflationData... What are Excess … [Read more...]
Unique Inflation Characteristics of the Decades in the Early 1900’s
The Beginning of Inflation Tracking in the U.S. Contrary to popular belief the U.S. didn't begin tracking inflation in 1913. Inflation tracking actually began in 1917 but once the index was constructed inflation rates and the Consumer Price Index for the prior years were reconstructed back to 1913 from price data available at the time. In 1917 the U.S. joined World War I and one of the prime motivators for developing the CPI was rapidly rising prices due to the war effort. The government was pumping money into the shipping centers and the workers were demanding cost-of-living adjustments for wages. Total cumulative inflation for the period of 1913 through 1919 was an astronomical … [Read more...]
How to Grow a Small Account into a Big Account
Today we've got a video for you from millionaire trader John Carter that shows: The difference between trading for income vs. trading for growth The # 1 job that every trader has to accomplish Why you don’t want to focus on being right Why position sizing may be the most important factor for small accounts Check out the video here … [Read more...]
Various Methods of Calculating Inflation
Why are There So Many Different Ways to Calculate Inflation? We've all heard the old saying, "Figures don't lie but liars figure" or perhaps "You can make numbers say anything you want". Both of these sayings contain the underlying assumption (or at least possibility) of malicious intent. But even if you have the raw data and just want to get at the truth, number calculations can present difficulties because the answer you get can depend on how you analyze it. For instance, you would think that if you want to know the "average" income of a group of 10 people it would be easy to calculate. And if all the incomes are relatively closely grouped it is easy... simply add them all up and … [Read more...]
April Inflation Up Sharply as Projected
The current CPI for the month of April was 237.072 which resulted in monthly inflation being up 0.33% in the month of April causing the annual inflation rate to jump from 1.51% up to 1.95%. Last month we told you to be aware that this month's jump would be seen as a possible return to inflation and of course the main stream media and even some of our competitors fell right into that trap. USInflationCalculator for instance quoted the Wall Street Journal as saying, "Inflation may be normalizing a bit faster than we thought," the Wall Street Journal quoted Laura Rosner, U.S. economist at BNP Paribas. "It’s still too early to assume this will persist, but it certainly raises the risks of … [Read more...]
Cost of Living- Infographic
Over the years prices have changed (generally getting higher except possibly for technology devices). But it is difficult to track the changes if the length of the ruler is constantly changing. You need to compare it to a constant measurement. When that comes to calculating the cost of things, in order to get an idea of how prices are doing you need to adjust them for inflation. That is called measuring "constant dollars". Typically the calculation is based on the CPI or Consumer Price Index. In today's infographic created by our friends at Vouchercloud we will look at how things are doing in the ten years since 2003. … [Read more...]
Monthly Inflation Jumps for March 2014
The current CPI for the month of March was 236.293 which resulted in monthly inflation being up 0.64% in the month of March causing the Annual inflation rate to rebound from 1.13% up to 1.51% nearly reaching January's 1.58%. And the Moore Inflation Predictor's inflation forecast is for another huge jump this month taking the inflation rate to over 2%. In other news: We are in the process of upgrading and redesigning the site in an effort to make it easier to use and as my webmaster says "more responsive" which means that if you have a tablet or even a smart phone you should be able to read it easier. If you are on a full sized screen and want to see what happens you can drag the side of … [Read more...]
Is the Federal Reserve Right About Inflation?
The Federal Reserve The Federal Reserve serves as the Central Bank of the United States, and whether you realize it or not, it plays an active role in the lives of every American. It makes decisions about monetary policy and interest rates that have a direct impact on the market and an indirect impact on everyone. The FED uses inflation targets to determine how much they can devalue (inflate) the currency. Many people believe that they created a massive money printing scheme cryptically called "Quantitative Easing"since QE1 converted almost worthless mortgage backed securities into currency. The Fed regularly issues statements about how inflation isn't really as bad as everyone says it … [Read more...]
Annual Inflation Down in February
Current Inflation Commentary- The U.S. Bureau of Labor Statistics has released the Annual Inflation rate today. For the year ending in February, inflation was 1.13% down roughly 1/3rd from 1.58% for the year ending in January. Monthly inflation was relatively high at 0.37% in January and the same again in February. This is consistent with the historical trend of low inflation in the 4th quarter and high inflation in the first quarter of the year. Click for larger image The Consumer Price Index came in at 234.781 in February which was … [Read more...]
What is the Misery Index?
The misery index was created by economists in an effort to quantify how bad the economy is based on cold hard numbers. In many ways, it can be argued that suffering is not quantifiable, after all how do you measure the pain associated with starvation, sickness, disease, homelessness, war, lawlessness and all the evils of society? But in economic terms economist Arthur Okun developed a simple but brilliant method of determining how miserable people were economically. The Misery Index and Unemployment The first component is unemployment. Okun reasoned that if a lot of people were unemployed, that would make the country as a whole feel poorer and so they would be less well off. Also a side … [Read more...]
