

Google wants to use its data to provide an new way of calculating inflation. - FSecurePal
http://www.theregister.co.uk/2010/10/13/google_price_index/

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treeface
I wonder how they'll get around the tech divide. For example: people don't
sell gasoline online, but there are numerous websites that track that
information. Also, any price index requires some decision over which goods are
included in the basket. How would they determine this? How will they be able
to determine the ratio of goods purchases online compared to those purchased
offline? How will they overcome the "lowest price" problem that tends to come
up (fortunately, for the consumer) when searches are done for products online.
A simple average? A weighted average based on market share? How would that
market share be determined?

Lots of unanswered technical details here. Still, it is another data point.

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charlief
Mostly duped, see: <http://news.ycombinator.com/item?id=1782681>

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retube
This is a simple idea, but one which is probably quite hard to execute. Issues
that spring to mind: identifying identical products (they may be named
slightly differently, or be similar variations on a product - ipod w/ 8GB or
16 GB), web prices may often be different from in-store prices (e.g chains
will price goods on a store-by-store basis), plus you got multiple prices for
a product (big, small, 500ml, 250ml), old prices, new prices, discounted
prices - and what about geographical location? Possibly hard to identify for
some sites / merchants.

Interesting, none-the-less.

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T_S_
Since about 40% of the CPI is housing, and that component is calculated in a
way that reduces the volatility of CPI, and essentially ignored the entire
housing bubble, then any alternative to government statistics is welcome. It
is as if the Fed was driving a car using the oil pressure gauge as a
speedometer.

There was a time when the cost of collecting economic statistics was
prohibitive for all but a monopoly provider. Now that we are all beginning to
walk around with smartphones in our pocket, we can look forward to using them
as live economic indicators.

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smackfu
Distilling inflation to a single number is hard even when you have all the
prices available.

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keltex
Governments would never agree to this. For example, in the U.S., The CPI
drives so many parts of the budget (inflation indexed bonds, Social Security
payments, real GNP vs nominal GNP, etc.) that they would never give control of
this to an external party [/conspiracytheory]

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treeface
I'm not sure where you get the idea that the government needs to agree with
something in order for it to be published. The CPI published by the Bureau of
Labor Statistics is just one of quite a few price indexes, some of which are
privately published.

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lzw
I think it is very important for people to know that CPI is not inflation, it
is not even a measure of inflation. At best-- and that is, if it were not so
greatly "massaged", it would be a measure of the impact of trailing inflation
on prices with the effect of productivity increases removed. But even that
ignores international money flows.

Inflation is increase in the money supply. So the best measure was the money
aggregates that the government used to publish. (Though I'm not sure how
accurate they were.)

This may sound like semantics, but it is this constant under-reporting of
inflation that is distorting the market. If you measure monetary inflation and
work against that, a capitalist system is much more effective. By replacing
"inflation" with "CPI" in people's minds, so many people have been led astray
and many economic calculations come out wrong.

But this is beneficial for government that wants to print money to support
deficit spending without limitation... and so they publish an essentially
completely fabricated CPI number. then when you talk about inflation being
%20, people say "LOL U Stupid. Inflation %1!!!!!"

To predict how prices will go, you project the likely increase in productivity
over the next year and the amount of inflation over the last year... but even
then, this is ignoring the massive holdings of dollars and treasuries overseas
-- which really represent past inflation that whose effects we avoided via the
bretton woods and other agreements. If confidence in the dollar continues to
drop, those dollars will continue to come home to roost, goosing price changes
even higher over the amount caused by the significant deficit spending (and
consequent money printing that increases the money supply) minus relatively
small increases in efficiency.

The noose around the dollar's neck is the accumulated decades of inflation
that have been exported overseas. If it becomes untenable to continue holding
them, then a selling panic will likely occur as nobody wants to be the last
one holding the bag.

This is what happened with greece. The US is approaching greece in terms of
debt levels and given that it appears the federal reserve is buying a large
chunk of the treasuries at each auction (under the table, of course, as if
this word got out it would immediately cause what I'm describing) the game can
go on for only so long.

2008 was not the financial crisis. The financial crisis is in the dollar,
which is the mother of all bubbles. I believe, that less than %10 of
treasuries have a greater than a year, which means that %90 of the debt is
being rolled over each year.

