Interest rates vs. Rate of Inflation

Discussion in 'Economy' started by BillSPrestonEsq, Oct 31, 2012.

  1. BillSPrestonEsq
    Offline

    BillSPrestonEsq Rookie

    Joined:
    Oct 31, 2012
    Messages:
    33
    Thanks Received:
    2
    Trophy Points:
    1
    Ratings:
    +2
    If the rate of inflation is double that of the average savings account how long before we have a serious problem? Another question, does anyone know another maybe more accurate measure of inflation than CPI? I am curious if anyone has found anything out there on the interwebs that might give a timeline for my first question. Maybe a good article or your own insight. Thanks
     
  2. expat_panama
    Offline

    expat_panama Silver Member

    Joined:
    Apr 12, 2011
    Messages:
    2,461
    Thanks Received:
    252
    Trophy Points:
    98
    Ratings:
    +253
    This is what we're talking about:

    inflation [ɪnˈfleɪʃən]
    n
    1. the act of inflating or state of being inflated
    2. (Economics) Economics a progressive increase in the general level of prices brought about by an expansion in demand or the money supply (demand-pull inflation) or by autonomous increases in costs (cost-push inflation) Compare deflation
    3. (Economics) Informal the rate of increase of prices
    Collins English Dictionary – Complete and Unabridged © HarperCollins Publishers 1991, 1994, 1998, 2000, 2003
    OK, so we're using the third definition and we're talking about the rate of increase of prices. If you started a thread and asked what the price was nobody would know what it was that you wanted a price for. Same for 'inflation'. Thousands upon thousands of items are bought and sold every day and there is an inflation rate for each one of them. This link takes you to over a thousand indexes used by the Fed, and this link goes to hundreds more with the BLS. If you care about everything being bought and sold in the US then you'd use the GDP deflator that the BEA uses to figure the 'real GDP'.

    Those are just some of the US gov't inflation indexes, and there're thousands more used in the private sector. It all depends on which prices you're interested in.
     

Share This Page