Distorted Inflation Data & Dynamic Pricing

Just bought Bob Woodward’s new book for a birthday gift from Amazon yesterday for $18.00.  I tried to buy another one this morning and was quoted a price of  $19.32 per book.

That’s Venezuela-esque inflation, folks.  Works out to 406,506% on an annualized basis.

Dynamic pricing based on predictive analytics is horseshit, in my book, and literally on Woodward’s book.

As the economy moves more and more to pricing with this this framework,  how are we to trust the CPI data?  In fact, why do we trust CPI it anyway?

I read sometime back that only about 40-50 percent of the CPI basket are actual, real, measurable prices.   Don’t quote us on this as I need to document it.  Will get back to you on it.

CPI & Cherry COLA

You know in you heart, and your pocketbook, real inflation is running hotter than 3.0 percent.

Here is the main reason why the government works so hard and has a vested interested in repressing the CPI inflation.  Higher COLAs = Bigger Deficits.

An automatic annual Social Security benefit increase is intended to reflect the rise in the cost of living over a one-year period. The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), updated monthly by the Bureau of Labor Statistics (BLS), is the measure that can trigger a benefit increase.  The Social Security cost-of-living adjustment (COLA) is based on the growth in the index from the highest third calendar quarter average CPI-W recorded (most often, from the previous year) to the average CPI-W for the third calendar quarter of the current year. If the CPI-W triggers a COLA, the COLA becomes effective in December of the current year and is payable in January of the following year. (Social Security payments always reflect benefits due for the preceding month.) A COLA trigger mechanism was first adopted in P.L. 92-603, the Social Security Amendments of 1972, and triggered COLAs were first payable in 1975.  Prior to 1975, Congress sporadically approved COLAs through the adoption of legislation.  – CRS