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Tuesday, October 4, 2011

Inflation Calculator: Purchasing Power of the Dollar Over Time,

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Inflation Calculator: Money’s Real Worth Over Time

The inflation calculator uses U.S. government provided Consumer Price Index (CPI) data to measure the purchasing power of the dollar over time. It’ll provide a look into the present, past or any time between. (Consumer inflation climbed 3.8% over the past year. It increased 0.4% in August. The next U.S. government update is on October 19, 2011.)
How to use: You can start with any date from 1913 through 2011. The first date field can also begin in the present, like 2011, and then move backwards – each method is interesting. The inflation calculator starts with default values just to give a quick glimpse into how it works. Simply clear or edit the numbers with your own.
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Inflation Calculator*

If in

(enter year)
I purchased an item for $
then in

(enter year**)
that item would cost:
Rate of inflation change:



*Uses latest available CPI data. Next data update on Oct. 19, 2011.

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CPI Inflation Calculator Details

The CPI inflation calculator uses the U.S. Consumer Price Index for a given calendar year. This data represents the changed prices in goods and services purchased in the U.S.
For 2011, the latest monthly index value is used.

Understanding Inflation: An Overview, Measuring and Its Role on the Economy

The amount a product costs should be the first decision a consumer has to make before they purchase a good or service. Consumers may find themselves asking what exactly makes a price rise and why their money can purchase less and less.
The answer to this question is inflation. What is inflation and why should any consumer care about inflation? A general overview of the inflation phenomenon, the main measures of inflation, and how inflation plays a role in the economy will all help a person better understand why their money seems to be worth less each year.

Overview of Inflation and its Pressure on the Economy: Spending, Demand and Supply

In order to truly understand inflation, the first step is listing the main cause of inflation pressures on the economy. Inflation begins initially and continues to occur due to sustained excess of spending in the economy. (Wilson 27)
This amounts to spending over and above what is considered average spending for the economy in past months. The type of spending that would cause inflation is "when people, groups, businesses, government, and foreigners all together "demand" or try to spend more than the economy can produce at full employment, prices in general will be bid up." (Ibid)
Basically what this amounts to is people all wanting to buy products and services, but there are not enough products or services to fulfill all the buyers. The prices will go up because manufacturers can sell the product at a much higher rate because there are so many buyers. The solution to the problem is really two separate incidences that must happen in order for prices to begin falling.
One of these solutions is "excess demand for goods and services is reduced" and the other solution is for "capacity of the economy to produce is expanded, the price level will continue to rise." (Ibid) Thinking about these two situations makes sense. If the demand for goods or services decreases then less people will want to buy and there will be more of the product for the remaining consumers. Also, if a manufactured item is rising because it is not manufactured in many factories and suddenly factories spring up all over to manufacture the product then the price will fall.
The demand and supply capacity are the cornerstones of inflation, but what also plays into inflation’s fluctuations is the money supply. The Federal Reserve Bank sets interest rates for borrowing of money. The lower the interest rate the greater amount of money that is borrowed, and the higher the interest rate the lesser amount of money that is borrowed. (Wilson 103) For example, if borrowing $1000 would cost 10% a year, a borrower would be paying $100 a year for the use of that initial $1000.
If, however, the Federal Reserve Bank lowers the interest rate to 5%, the amount the borrower would be paying per year would be cut in half. In the latter example, a borrower would be willing to take out a larger amount of money because it would cost them less. So, with a larger amount of cheaper money in the market, prices will begin to rise because the cost of that money would cause more people to borrow as compared to a higher rate of interest.
Money would essentially be worth less because the Federal Reserve allows it to be worth less by dropping the interest rate. The rise in prices would continue until the Federal Reserve once again decides to raise the interest rate. (Ibid)
The Federal Reserve utilizes these money techniques in order to help spur growth in the economy, but the downside to economic growth is always inflation.

Measures of Inflation: Consumer Price Index (CPI), Bureau of Labor Statistics (BLS) and the Bryan-Cecchetti model

An important concept of inflation is to pay close attention to inflation indicators. These "indicators" are indexes that signal a potential arrival of inflation for the country. Many measures of inflation exist, but the main types are the Consumer Price Index (CPI), Bureau of Labor Statistics (BLS), and the Bryan-Cecchetti model.

The Consumer Price Index (CPI)

The CPI is perhaps the most important indicator because it is the model that all other inflation models emulate in some way. The first step in understanding the CPI is to decipher the calculation of the index. The CPI is constructed from basic component indexes. Component indexes are those goods and services that a consumer purchases and those "components" are split into 207 items. (Moulton 13) Also, there are 44 more items included for the urban areas of the United States, and these two sets of items are multiplied together to a total of 9,108 components for the CPI. (Ibid)
For example, dairy products are considered just set of the components within the 9,108 components used to calculate the CPI. A problem arises with the CPI in that many products come and go in the market and it is up to the CPI to document these types of changes. This problem is overcome by the economists allowing for products to enter and leave the market as well as "estimating the indexes on the basis of samples used from all the items that consumers buy" for a given period. (Ibid)
This type of calculating gives economists as comprehensive a picture as one can get. The resulting figure is compared to previous time periods and an increase percentage or decrease percentage is discovered from the calculations. This increase or decrease percentage is the amount that general prices have risen or fallen in between those time periods. If the prices rise then the CPI will show the American public that inflation has occurred.
It is important that the CPI stay current with the ever-changing American economy. This is why the CPI is updated once every 10 years, and the last update occurred in 1998. (Greenlees, and Mason 3) This aspect of the CPI is important because of its relation to inflation. The CPI is used in many government programs including entitlements for school lunches and food stamps as well as the amount figured for tax deductions. (Ibid)
If the CPI is not allowed to evolve with the evolving economy, many people would not be allowed government benefits or tax deductions that they otherwise would deserve. Thus, the CPI is examined and revised so inflation pressures do not have as much an impact on government programs.

The Bureau of Labor Statistics (BLS)

Another measure of inflation that is essentially a CPI number but factored with a different set of variables is the BLS model. The BLS model highlights the fact that some parts of the CPI are considered volatile due to outside pressures such as weather and international conflicts.
Cogley suggests, "the Bureau of Labor Statistics computes a ‘core inflation’ measure that consists of a weighted average of all CPI components except for food and energy, which are removed because their prices tend to be more volatile." (94)
Energy can be affected by international conflicts and food supplies can be affected by the weather. Thus, the BLS model will demonstrate a less drastic change in inflation numbers if these events do occur.

The Bryan-Cecchetti model

A final measure of inflation that utilizes the CPI is the Bryan-Cecchetti model. This model takes the BLS model one step further. The Bryan-Cecchetti system still uses the CPI as a basis, because the economists that developed this model understand that the CPI is the greatest general measure to be utilized.
However, the Bryan-Cecchetti model "extends the BLS approach by automatically excluding large price changes from the CPI basket regardless of the sector in which they arise." (Ibid)
Bryan-Cecchetti correctly identifies that other sectors besides energy and food are affected by outside influences and can have a drastic rise or fall. However, the CPI is still considered the main standard for deciding the amount of inflation in the economy.

The Role Inflation Play on the Economy

Inflation would essentially mean nothing to the average consumer if it had no bearing on the economy. It is in the economy that inflation can either hinder a person’s ability to purchase or cause a lack of growth for businesses. The role inflation plays in the economy is substantial.
One of the main consequences of unwanted inflation is to the American worker. The first negative impact is a consumer’s shopping patterns and amount of money spent on goods and services. Inflation "causes consumers to shift the timing of their shopping closer to the receipt of income and creates incentives for shop owners to decrease their inventories." (Frenkel, and Mehrez 616)
Less of a product in the store and less purchasing power of consumers combines to create even more inflation in the economy to occur. It is a cycle that ultimately raises prices to a harmful degree. So, a consumer is left with little alternatives to combat the harm that inflation causes.
A person with less money will possibly lose their job (because of the lack of buying by other consumers), will consume less (because of the higher prices and lower supplies), invest less (because of the lack of money to invest), and finally rely more on credit (because the purchasing power of credit does not have to be paid until later). (Ibid)
Another problem with inflation in the economy is it decreases the value of the dollar. As discussed previously, more dollars in the stream of commerce or rising prices due to limited supplies will help lower the value of the dollar. In this country, for example, "the dollar lost about three-fourths of its value between 1965 to 1985; between 1985 and 2005, it lost a bit over one-third of its value." (Hoar 42)
This dramatic decrease in dollar value is due to inflation. This occurrence is precisely why older Americans will reminisce about how a movie and a Coke cost them less than a dollar. The dollar is still the same, but the amount it can purchase has decreased and will more than likely continue to decrease in the future.

Wrapping Inflation and the CPI Up

If a person is purchasing goods or services in America then inflation and the CPI are important concepts to understand. Understanding these two concepts will help a person better plan their future and allow them to stay calm when their money cannot buy them as much as before.

Works Cited

  • Cogley, Timothy. "A Simple Adaptive Measure of Core Inflation." Journal of Money, Credit & Banking 34.1 (2002): 94+.
  • Frenkel, Michael, and Gil Mehrez. "Inflation and the Misallocation of Resources." Economic Inquiry 38.4 (2000): 616-628.
  • Greenlees, John S., and Charles C. Mason. "Overview of the 1998 Revision of the Consumer Price Index." Monthly Labor Review 119.12 (1996): 3+.
  • Hoar, William P. "Myths about Inflation." The New American 12 Dec. 2005: 42+.
  • Moulton, Brent R. "Basic Components of the CPI: Estimation of Price Changes." Monthly Labor Review 116.12 (1993): 13+.
  • Wilson, George W. Inflation Causes, Consequences, and Cures. 1st ed. Bloomington, IN: Indiana University Press, 1982.

Inflation Article

Understanding Inflation: An Overview, Measuring and Its Role on the Economy written by James Richard Robbins III.

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Lonedell Woman Paula Pursley Found Dead

October 4, 2011

The Franklin County Sheriff's Department confirms the death of a 45-year-old Franklin County woman. Deputies say a family friend went to a residence in the 600 block of Lynn Lane in Lonedell to pick up her friend. When the friend arrived to the house around ten-forty this morning, the woman was found sitting in a chair unresponsive at the time. St. Clair Ambulance arrived at the scene and pronounced Paula Pursley deceased. The Sheriff's Office responded to the call. There are no signs of foul play at this time. The victim had reportedly been having problems with headaches in the past.


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VIDEO: MISSOURI THE BEAUTIFUL Take a patriotic tour of the Show Me State's natural wonders . . ========================================================== .

Important Note: FAIR USE NOTICE: This blog may contain copyrighted (©) material the use of which has not always been specifically authorized by the copyright owner. Such material is made available to advance understanding of ecological, political, human rights, economic, democracy, scientific, moral, ethical, and social justice issues, etc. It is believed that this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior general interest in receiving similar information for research and educational purposes. "Copyright Disclaimer Under Section 107 of the Copyright Act 1976, allowance is made for "fair use" for purposes such as criticism, comment, news reporting, teaching, scholarship, and research. Fair use is a use permitted by copyright statute that might otherwise be infringing. Non-profit, educational or personal use tips the balance in favor of fair use." . ________________________________________________________________________

Eric Holder to Take the Fall for Obama UPDATE: Obama Administration Under Fire Inept Gun Trafficking Investigation 'Project Gunrunner'

VIDEO: Obstruction of Justice Eric Holder Fast and Furious Obama Fall Guy LIAR - Three Dog Night
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ATF Fast and Furious: New documents show Attorney General Eric Holder was briefed in July 2010

By Sharyl Attkisson
cbsnews
October 4, 2011

WASHINGTON - New documents obtained by CBS News show Attorney General Eric Holder was sent briefings on the controversial Fast and Furious operation as far back as July 2010. That directly contradicts his statement to Congress.
On May 3, 2011, Holder told a Judiciary Committee hearing, "I'm not sure of the exact date, but I probably heard about Fast and Furious for the first time over the last few weeks."
Yet internal Justice Department documents show that at least ten months before that hearing, Holder began receiving frequent memos discussing Fast and Furious.
Read the new documents
Read the July 5, 2010 memo Read the "It's a tricky case" email Read the memo to AG Holder from Asst. AG Lanny A. Breuer The documents came from the head of the National Drug Intelligence Center and Assistant Attorney General Lanny Breuer.
In Fast and Furious, ATF agents allegedly allowed thousands of weapons to cross the border and fall into the hands of Mexican drug cartels.
Gunwalking scandal uncovered at ATF
It's called letting guns "walk," and it remained secret to the public until Border Patrol Agent Brian Terry was murdered last December. Two guns from Fast and Furious were found at the scene, and ATF agent John Dodson blew the whistle on the operation.
Agent: I was ordered to let guns "walk" into Mexico
Ever since, the Justice Department has publicly tried to distance itself. But the new documents leave no doubt that high level Justice officials knew guns were being "walked."
Two Justice Department officials mulled it over in an email exchange Oct. 18, 2010. "It's a tricky case given the number of guns that have walked but is a significant set of prosecutions," says Jason Weinstein, Deputy Assistant Attorney General of the Criminal Division. Deputy Chief of the National Gang Unit James Trusty replies "I'm not sure how much grief we get for 'guns walking.' It may be more like, "Finally they're going after people who sent guns down there."
The Justice Department told CBS News that the officials in those emails were talking about a different case started before Eric Holder became Attorney General. And tonight they tell CBS News, Holder misunderstood that question from the committee - he did know about Fast and Furious - just not the details.



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Obama Administration Under Mounting Pressure for Botched Gun Trafficking Investigation

By William La Jeunesse
March 28, 2011
  FoxNews.com

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Congress and the Department of Justice appear to be headed for a showdown this week over documents detailing Operation Fast and Furious, the botched gunrunning sting set up by the Bureau of Alcohol, Tobacco, Firearms and Explosives that funneled more than 1,700 smuggled weapons from Arizona to Mexico.
The Justice Department has until Wednesday to deliver to congressional investigators a stack of records and emails naming the individuals responsible for the gun trafficking operation that may have killed dozens, if not hundreds of Mexicans, and is becoming a growing embarrassment for the Obama administration.
Under Project Gunrunner and the Phoenix off-shoot, dubbed Fast and Furious, the ATF encouraged gun store owners to sell to straw buyers -- consumers who they suspected of working on behalf of Mexican drug cartels. 
Project Gunrunner purposely allowed the straw buyers to illegally buy and export guns only to see where they surfaced in Mexico. Using this investigative technique, the ATF hoped to take down the entire gun trafficking organization. Instead, records show it allowed more than 1,700 guns, including hundreds of AK-47s and high-powered, armor-piercing .50-caliber rifles to be trafficked to Mexico
Buying guns for non-personal use is illegal. Yet gun store owners were assured by ATF agents the buyers were under investigation and the guns were being intercepted before crossing into Mexico. 
Instead, whistleblowers say the guns were allowed "to walk." 
President Obama, speaking for the first time about the growing scandal, conceded last week Fast and Furious may have been "a serious mistake," but he claimed, "I did not authorize it; Eric Holder, the attorney general, did not authorize it. He's been very clear that our policy is to catch gunrunners and put them into jail." 
But an investigation by Rep. Darrell Issa, R-Calif., chairman of the House Committee on Oversight and Government Reform, could show otherwise. 
The ATF operates under Justice Department, and two assistant U.S. attorneys in Phoenix authorized virtually every wiretap, affidavit and investigation conducted in Operation Fast and Furious. 
Some, like Issa, wonder how Holder could not have known about an investigation that size. 
"One of the questions we always ask is who is lying," Issa told Fox News. "We lose our credibility if we don't come clean and make the changes necessary to save lives on both sides of the border." 
If the Justice Department and ATF refuse to deliver the records Issa requested, as it already has done with similar requests by Sen. Charles Grassley, R-Iowa, Issa can subpoena the records. 
"We will subpoena if we have to, we'll hold hearings if we have to, we'll call in officials if we have to. But at the end of the day, the two Americans likely to have died as a result of this action pale in comparison to the countless numbers of Mexicans who have been killed," said Issa. 
He is referring to Border Patrol Agent Brian Terry and Immigration and Customs Enforcement Agent Jamie Zapata. The guns used to kill both men have been linked to Project Gunrunner. 
Humberto Trevino, a senior Mexican lawmaker, says at least 150 people have been shot with ATF-monitored gun

Read more:



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