"Gary Coffman" wrote in message
...
On Fri, 15 Aug 2003 23:45:40 GMT, "Ed Huntress"
wrote:
"Gary R Coffman" wrote in message
.. .
On Thu, 14 Aug 2003 12:24:37 GMT, "Ed Huntress"
wrote:
Well, then, examine it in constant dollars, Gary. The real GNP in
constant
dollars didn't decline over that period, either. The DoC figures are
available in both current and constant dollars.
In constant dollars (1982), average household income increased by
72.78% from 1964 to 1980. But during that same time, constant
dollar household costs (excluding energy costs) increased by 312%.
What do you mean by "constant dollar household costs"? I'm not familiar
with
that stat. Are you talking about household *expenditures*? If so, how
does
that relate to "costs"?
I'm talking about the cost of maintaining a household (middle class
living standard). That's calculated by adding the CPI to the amortized
cost of housing and the big ticket appliances.
Gack! CPI already INCLUDES the cost of housing (which is roughly 40% of the
CPI) and big ticket appliances. Why are you adding them again??
The CPI rise over the period 1964 to 1980 was 166%, not 312%. And, if you
want to make a meaningful comparison between household income and household
expenses, you have to use the CURRENT dollar values for income, not the
constant dollar values. If you calculate it right the two come into close
agreement, as they should.
Or are you talking about inflation?
Partially.
CPI includes ALL inflation. It IS mostly inflation. CPI is in current
dollars, not constant dollars. A CPI in constant dollars would be
meaningless. In fact, CPI is the DEFLATOR used to normalize other costs for
inflation.
I'll address the rest of this when I understand what you mean here.
Meantime, if you want a mainstream explanation of the '70s inflation
(which
sounds like what you're talking about), you can find one at:
http://econ161.berkeley.edu/Econ_Art...ionofthes.html
This article just confirms that government used monetary policy
to keep unemployment below 3%. What it doesn't address is that
married women entered the workforce during this era in unpresidented
numbers, from less than 10% at its beginning to near 90% at its end.
That near doubling of workers seeking jobs is why the money supply
had to be allowed to expand so much and so fast.
Gary, your figures are cocked-up from start to finish. If you're claiming
that an increase in workers drove up costs, look at the total percentage of
working-age adults, the total of men and women, who were actually working
over that period of '64 - '80. It rose from roughly 54% to 58%. How does
that support an increase in the cost of maintaining a household?
Also, if you look at the increases in the percentage of adults who are
working over that period, and track it against inflation, you'll see that
the people entering the workforce LAGGED inflation. The two-worker families
were catching up to inflation, not driving it.
The percentage of adults in the workforce now is around 60%. We've reached a
stage at which a high percentage of those middle-class households now
require two workers, as I said at the beginning of this thread. But there's
no evidence that they've driven up prices. The inflated prices were the
leading factor, and the hefty inflation rates from the mid-'70s on were
clearly driven by fuel prices rising for peculiar reasons, not by excessive
demand.
Why are you introducing "money supply," BTW?
--
Ed Huntress
(remove "3" from email address for email reply)