Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Johnson & Johnson (JNJ) Big Pharma Stock for Machine Learning Life Extension Investing - 2nd Jul 20
All Eyes on Markets to Get a Refreshed Outlook - 2nd Jul 20
The Darkening Clouds on the Stock Market S&P 500 Horizon - 2nd Jul 20
US Fourth Turning Reaches Boiling Point as America Bends its Knee - 2nd Jul 20
After 2nd Quarter Economic Carnage, the Quest for Philippine Recovery - 2nd Jul 20
Gold Completes Another Washout Rotation – Here We Go - 2nd Jul 20
Roosevelt 2.0 and ‘here, hold my beer' - 2nd Jul 20
U.S. Dollar: When Almost Everyone Is Bearish... - 1st Jul 20
Politicians Prepare New Money Drops as US Dollar Weakens - 1st Jul 20
Gold Stocks Still Undervalued - 1st Jul 20
High Premiums in Physical Gold Market: Scam or Supply Crisis? - 1st Jul 20
US Stock Markets Enter Parabolic Price Move - 1st Jul 20
In The Year 2025 If Fiat Currency Can Survive - 30th Jun 20
Gold Likes the IMF Predicting a Deeper Recession - 30th Jun 20
Silver Is Still Cheap For Now - 30th Jun 20
More Stock Market Selling Ahead - 30th Jun 20
Trending Ecommerce Sites in 2020 - 30th Jun 20
Stock Market S&P 500 Approaching the Precipice - 29th Jun 20
APPLE Tech Stock for Investing to Profit from the Machine Learning Mega trend - 29th Jun 20
Student / Gamer Custom System Build June 2020 Proving Impossible - Overclockers UK - 29th Jun 20
US Dollar with Ney and Gann Angles - 29th Jun 20
Europe's Banking Sector: When (and Why) the Rout Really Began - 29th Jun 20
Will People Accept Rampant Inflation? Hell, No! - 29th Jun 20
Gold & Silver Begin The Move To New All-Time Highs - 29th Jun 20
US Stock Market Enters Parabolic Price Move – Be Prepared - 29th Jun 20
Meet BlackRock, the New Great Vampire Squid - 28th Jun 20
Stock Market S&P 500 Approaching a Defining Moment - 28th Jun 20
U.S. Long Bond: Let's Review the "Upward Point of Exhaustion" - 27th Jun 20
Gold, Copper and Silver are Must-own Metals - 27th Jun 20
Why People Have Always Held Gold - 27th Jun 20
Crude Oil Price Meets Key Resistance - 27th Jun 20
INTEL x86 Chip Giant Stock Targets Artificial Intelligence and Quantum Computing for 2020's Growth - 25th Jun 20
Gold’s Long-term Turning Point is Here - 25th Jun 20
Hainan’s ASEAN Future and Dark Clouds Over Hong Kong - 25th Jun 20
Silver Price Trend Analysis - 24th Jun 20
A Stealth Stocks Double Dip or Bear Market Has Started - 24th Jun 20
Trillion-dollar US infrastructure plan will draw in plenty of metal - 24th Jun 20
WARNING: The U.S. Banking System ISN’T as Strong as Advertised - 24th Jun 20
All That Glitters When the World Jitters is Probably Gold - 24th Jun 20
Making Sense of Crude Oil Price Narrow Trading Range - 23rd Jun 20
Elon Musk Mocks Nikola Motors as “Dumb.” Is He Right? - 23rd Jun 20
MICROSOFT Transforming from PC Software to Cloud Services AI, Deep Learning Giant - 23rd Jun 20
Stock Market Decline Resumes - 22nd Jun 20
Excellent Silver Seasonal Buying Opportunity Lies Directly Ahead - 22nd Jun 20
Where is the US Dollar trend headed ? - 22nd Jun 20
Most Shoppers have Stopped Following Supermarket Arrows, is Coughing the New Racism? - 22nd Jun 20

Market Oracle FREE Newsletter

AI Stocks 2020-2035 15 Year Trend Forecast

Hedonics, Food, and Pluralistic Ignorance

Economics / Inflation Sep 23, 2016 - 06:54 AM GMT

By: Dr_Jeff_Lewis

Economics

Inflation is alive and well – despite what we hear from the mainstream. Due to pluralistic ignorance, it persists much longer than anyone would have ever predicted.

From Wikipedia:

Pluralistic ignorance 

“In social psychology, pluralistic ignorance is a situation in which a majority of group members privately reject a norm, but incorrectly assume that most others accept it, and therefore go along with it.[1] This is also described as ‘no one believes, but everyone thinks that everyone believes’.”


In short, pluralistic ignorance is a bias about a social group, held by a social group.

An article written by Martin Gansberg for the March 27, 1963 issue of The New York Times highlights an absurd case of a woman’s (Kitty Genovese) brutal murder. During this crime, 38 of her neighbors were able to hear her screams and retell the incident. Yet nobody went to help her and only a few actually called the police. Pluralistic Ignorance can be attributed to this case due to the fact that many heard her screams for help and knew she was dying yet nobody did anything to help. Everyone similarly assumed someone else would help and that it was not their place to get involved. No witnesses came forward until after the body was pronounced dead and carried from the crime scene.

Also known as the bystander effect, from a monetary perspective, it is operating on a massive scale, from asset valuation (including bonds and equities), to the intrinsic value of foreign exchange and currencies backed by a tenuous faith.

CPI Lies

Everyone knows that official inflation statistics are an academically-derived phenomenon and not a representation of reality. But most assume that everyone else accepts it too, as “all we have to work with”.

No one really believes government statistics, but everyone thinks that everyone believes, so it’s accepted.

For example, on an individual level, many are aware that (using BLS CPI numbers):

From 1914 to Sept. 1971 (57 years), Rent CPI goes up 133%.

Next 43 years, rent goes up 458%.

Hedonic Massage 

Data is collected from retail stores and adjusted by specialists to reflect changes in quantity of a product offered or an increase in quality.

Much of the drop in prices for electronics reflects an increase in quality over the past 10 years.

Ah, so the drop in prices in not actually a drop in prices which very well may be rising… but simply “an increase in quality.”

Things really are quite great because, through the magic of hedonics, most things are really cheaper than ever.

Since the 1980s, for instance, the real price of a midrange color television has plummeted about tenfold, and televisions today are crisper, bigger, lighter and often Internet-connected.

Similarly, the effective price of clothing, bicycles, small appliances, processed foods — virtually anything produced in a factory — has followed a downward trajectory. The result is that Americans can buy much more stuff at bargain prices.

They can.

It doesn’t matter that the technology appears more advanced. To see the advantage, you would need to spend hundreds or thousands of dollars every two to three years to realize that it simply isn’t going to happen for a shrinking (disappearing) middle class.

It would be funny if it wasn’t so depressing.

This sleight of hand is used by economists always and everywhere to make inflation appear tamer than it is.

Food Crisis 

Here is an excerpt that says it best, from

Around the World, Social Unrest Starts with Soaring Food Prices

By Stephanie Krasnow

http://www.alternet.org/food/ when-hunger-strikes

“So what do the Arab Spring, Syrian civil war, Occupy Gezi, and the recent conflicts in the Ukraine, Venezuela, Bosnia and Thailand all have in common? Expensive food… and not much of it.

From 2008 to 2014, insurrectionist activity has sequentially erupted across the globe, from Tunisia and Egypt to Syria and Yemen; from Greece, Spain, Turkey and Brazil to Thailand, Bosnia, Venezuela and the Ukraine.

In every instance, there was a tipping point: in Tunisia, it was Mohamed Bouazizi’s self-immolation; in New York City, it was the Wall Street bailout; in Istanbul, it was a few threatened trees in Gezi Park; in Brazil, it was a 20-cent increase in transit fare. Today, the rest of our world seems poised to erupt, with every nation near and far harboring its own Achilles heel, its own tender nerve of geopolitical vulnerability at risk of getting pricked.

Thanks to corporate media, which conveniently co-opts the restless amnesia of the news cycle to distract attention from ongoing, systemic issues, this global revolutionary fervor has been presented to us as a bunch of sound and fury that rises and falls and amounts to nothing. But beneath what we’ve come to perceive as isolated and distinct events is a shared but neglected root cause of environmental crisis. 

What most people don’t realize is that outbreaks of social unrest are preceded, usually, by a single pattern — an unholy trinity of drought, low crop yield and soaring food prices”. 

Lack of public opposition then helps perpetuate a norm that may be, in fact, disliked by most people. A large number of people are wrong about something, but because everyone sees this wrong idea as the perceived social norm, no one speaks up against it.

The past five years of Fed monetary easing – which explicitly allowed U.S. politicians to avoid engaging in much needed and very unpopular fiscal reform – only focused on helping just the wealthiest.

Once enough people collectively express the truth, perception changes in an instant and down goes the institutions.

It is undeniable that most people on an individual can see it, and even admit the insurmountable problems. But as a group it’s a completely different story.

And yet, slowly but surely, consciousness expands. The BLS recognizes food inflation today, and the CME is shut down tomorrow. Sadly, from an investment standpoint, gains or safety will only be realized in retrospect.

1. To receive early notification for new articles, click here. 

2. Or to view all of our products and services, click here. 

3. Or...support the cause, and buy me a cold one! 

By Dr. Jeff Lewis

    Dr. Jeffrey Lewis, in addition to running a busy medical practice, is the editor of Silver-Coin-Investor.com

    Copyright © 2015 Dr. Jeff Lewis- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Dr. Jeff Lewis Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules