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Subject:  Re: Lies, damn lies and CPI Date:  3/24/2013  8:05 PM
Author:  captainccs Number:  14024 of 25354

so perhaps Denny and others can judge for themselves.

I have no idea if the government at 2% is right or wrong nor if at 5 to 8% the author is right or wrong nor do I particularly care since I don't live in the USA. My biggest economic contact with the USA now is through the stock market. Since stocks generally track inflation, American inflation benefits me since I do my spending in large measure in Venezuelan currency. I fill my gas tank for a quarter, tip included. I see gas deflation through government action (or inaction). We used to have what was considered low inflation at 6%. You could buy bonds yielding 8% for a 2% net or get loans at 12%. That regime stopped in 1984. We have witnessed 30 to 35% devaluation of the Venezuelan currency against the US dollar. The Venezuelan economy is not entirely dollarized meaning the inflation rate is probably under 30%. Our CPI for 1997 to 2000 (as calculated by the central bank) was 32.5%, 26.6%, 18.5%, and 12.5%. I find these numbers highly suspect. The Chavez government was elected in 1998 and took power in 1999. In less that two years a regime that said it was not interested in administration but in politics reduced inflation to less that half. That's pure and unadulterated BS.

As I said in my original post, inflation is a very personal thing. I benefit from Venezuelan inflation. My dollars maintain value much better than Venezuelan inflation eats away at it. I have been making a mental calculation at the supermarket every time I go shopping. First I'm horrified by the inflation. Then I convert my bill to US dollars. My shopping cart has remained incredibly close to $100.00 for the last 20 years.

With 30% inflation funny things happen. I paid Bs.1,200,000 for my car back in 1993. Twenty years later (I don't drive much now) I can sell the used car for around Bs.50,000,000 (BsF.50,000 in new currency). Anyone who has some money to spare either buys foreign exchange or capital goods to beat inflation.

Just because I post with a provocative if plagiarized subject line, don't assume I'm taking sides. Read my post carefully and you'll see I took no sides.

Denny Schlesinger
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