I’m thankful for Bogleheads advice to build a TIPS ladder but now I’ll have to see what happens to them in stagflation. Anyone shopping for basic staple goods is not caught off guard by inflation. I wonder how inflation will be impacted if we have a “conflict” or even war given the armament build up in Diego Garcia and tensions mounting with Iran? The Middle East is always explosive but things seem to have escalated.
An important disclaimer: My analyses are entirely economic in nature, and do not constitute particular financial or investment advice. There are Substacks which do offer investment advice, but All Facts Matter is not one of them.
Which is not to criticize your comment re: TIPS ladders, merely to clarify that I am not going to wade into that sort of discussion. I look at these matter from perspective of policy, not portfolios.
If the missiles let loose over Iran, I suspect the in the short term there will be a spike in the price of oil. That is the usual case when the US gets into a shooting war in the Persian Gulf (Desert Shield/Desert Storm and Operation Iraqi Freedom). How much of a spike and how long it lasts will depend on what happens after the first missile barrage.
If Iran’s oil production is curtailed that will push the price of oil up because China will have to buy even more Saudi crude than it does currently. That could put pressure on Ukraine to cut a deal to end the war with Russia, because Putin will be an unavoidable beneficiary of that price rise.
And things have escalated Tehran Times is reporting over on X that Iran is at the equivalent of either Defcon 1 or Defcon 2, with missiles in launchers ready for flight.
Thank you for detailed figures that zero in on what’s going on, Peter. The picture may be muddled, but your analysis SHOWS that it’s muddled, and therefore significant change is beginning.
And this is what I’ve been afraid of. Trump needs to do a better job of explaining to the public how his long-term strategy will work, how we need to be patient. The corporate media will be screaming otherwise, and so Trump needs to counter that, or his agenda is in political trouble.
Peter, I’ve always wanted to ask you about the statistical margin for error in the government figures. For example, if the figure for food inflation declines 0.01 %, is that within the margin for error, and does the government tell us what that margin for error is?
When it comes to the inflation stats, the margin for error is somewhere between “it’s complete BS” and “it’s a Scientific Wild Assed Guess.”
The WORST way to read inflation metrics is as a depiction of absolute pricing reality. They are not.
First and foremost, they are an index of prices, so already there is a layer of abstraction between price indices and pricing reality.
Further, they are in all circumstances, based on a sampling, and any sampling which aims to cover the whole of the country is going to have wide variances between what the sample shows and what individual experience shows.
What I look for in the inflation metrics are trends.
Are prices going up?
Are prices going up faster or slower?
Are prices going down?
How prices are shifting—and which prices are shifting—are what tell the tale in the economy. Bear in mind that inflation is only a problem if prices rise faster than wages (which they generally do), and that therefore inflation is only a problem to the degree price rises exceed wage rises.
These are the essential elements with respect to inflation. The trends very much are the narrative when it comes to prices.
“When it comes to the inflation stats, the margin for error is somewhere between “it’s complete BS” and “it’s a Scientific Wild Assed Guess.”” - that’s the best laugh-out-loud I’ve had in days, Peter. Thanks!
I’m thankful for Bogleheads advice to build a TIPS ladder but now I’ll have to see what happens to them in stagflation. Anyone shopping for basic staple goods is not caught off guard by inflation. I wonder how inflation will be impacted if we have a “conflict” or even war given the armament build up in Diego Garcia and tensions mounting with Iran? The Middle East is always explosive but things seem to have escalated.
An important disclaimer: My analyses are entirely economic in nature, and do not constitute particular financial or investment advice. There are Substacks which do offer investment advice, but All Facts Matter is not one of them.
Which is not to criticize your comment re: TIPS ladders, merely to clarify that I am not going to wade into that sort of discussion. I look at these matter from perspective of policy, not portfolios.
If the missiles let loose over Iran, I suspect the in the short term there will be a spike in the price of oil. That is the usual case when the US gets into a shooting war in the Persian Gulf (Desert Shield/Desert Storm and Operation Iraqi Freedom). How much of a spike and how long it lasts will depend on what happens after the first missile barrage.
If Iran’s oil production is curtailed that will push the price of oil up because China will have to buy even more Saudi crude than it does currently. That could put pressure on Ukraine to cut a deal to end the war with Russia, because Putin will be an unavoidable beneficiary of that price rise.
And things have escalated Tehran Times is reporting over on X that Iran is at the equivalent of either Defcon 1 or Defcon 2, with missiles in launchers ready for flight.
https://substack.com/@peternaylandkust/note/c-104909628?
So yeah….definitely cause for concern here.
Thank you for detailed figures that zero in on what’s going on, Peter. The picture may be muddled, but your analysis SHOWS that it’s muddled, and therefore significant change is beginning.
And this is what I’ve been afraid of. Trump needs to do a better job of explaining to the public how his long-term strategy will work, how we need to be patient. The corporate media will be screaming otherwise, and so Trump needs to counter that, or his agenda is in political trouble.
Peter, I’ve always wanted to ask you about the statistical margin for error in the government figures. For example, if the figure for food inflation declines 0.01 %, is that within the margin for error, and does the government tell us what that margin for error is?
When it comes to the inflation stats, the margin for error is somewhere between “it’s complete BS” and “it’s a Scientific Wild Assed Guess.”
The WORST way to read inflation metrics is as a depiction of absolute pricing reality. They are not.
First and foremost, they are an index of prices, so already there is a layer of abstraction between price indices and pricing reality.
Further, they are in all circumstances, based on a sampling, and any sampling which aims to cover the whole of the country is going to have wide variances between what the sample shows and what individual experience shows.
What I look for in the inflation metrics are trends.
Are prices going up?
Are prices going up faster or slower?
Are prices going down?
How prices are shifting—and which prices are shifting—are what tell the tale in the economy. Bear in mind that inflation is only a problem if prices rise faster than wages (which they generally do), and that therefore inflation is only a problem to the degree price rises exceed wage rises.
These are the essential elements with respect to inflation. The trends very much are the narrative when it comes to prices.
“When it comes to the inflation stats, the margin for error is somewhere between “it’s complete BS” and “it’s a Scientific Wild Assed Guess.”” - that’s the best laugh-out-loud I’ve had in days, Peter. Thanks!