Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
The Best “Pick-and-Shovel” Play for the Online Grocery Boom - 18th July 19
Is the Stock Market Rally Floating on Thin Air? - 18th July 19
Biotech Stocks With Near Term Catalysts - 18th July 19
SPX Consolidating, GBP and CAD Could be in Focus - 18th July 19
UK House Building and Population Growth Analysis - 17th July 19
Financial Crisis Stocks Bear Market Is Scary Close - 17th July 19
Want to See What's Next for the US Economy? Try This. - 17th July 19
What to do if You Blow the Trading Account - 17th July 19
Bitcoin Is Far Too Risky for Most Investors - 17th July 19
Core Inflation Rises but Fed Is Going to Cut Rates. Will Gold Gain? - 17th July 19
Boost your Trading Results - FREE eBook - 17th July 19
This Needs To Happen Before Silver Really Takes Off - 17th July 19
NASDAQ Should Reach 8031 Before Topping - 17th July 19
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19
Stocks Market Investors Worried About the Fed? Don't Be -- Here's Why - 13th July 19
Could Gold Launch Into A Parabolic Upside Rally? - 13th July 19
Stock Market SPX and Dow in BREAKOUT but this is the worrying part - 13th July 19
Key Stage 2 SATS Tests Results Grades and Scores GDS, EXS, WTS Explained - 13th July 19
INTEL Stock Investing in Qubits and AI Neural Network Processors - Video - 12th July 19
Gold Price Selloff Risk High - 12th July 19
State of the US Economy as Laffer Gets Laughable - 12th July 19
Dow Stock Market Trend Forecast Current State - 12th July 19
Stock Market Major Index Top In 3 to 5 Weeks? - 11th July 19
Platinum Price vs Gold Price - 11th July 19
What This Centi-Billionaire Fashion Magnate Can Teach You About Investing - 11th July 19
Stock Market Fundamentals are Weakening: 3000 on SPX Means Nothing - 11th July 19
This Tobacco Stock Is a Big Winner from E-Cigarette Bans - 11th July 19
Investing in Life Extending Pharma Stocks - 11th July 19
How to Pay for It All: An Option the Presidential Candidates Missed - 11th July 19
Mining Stocks Flash Powerful Signal for Gold and Silver Markets - 11th July 19
5 Surefire Ways to Get More Viewers for Your Video Series - 11th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

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