Food: 14.792%
Housing: 41.460%
Fuel: 5.079%
Energy (included inside of "housing category"): 5.096%
If you're curious, you can further subdivide that into milk and eggs. But the list becomes way too unwieldy at that point. The averages are then computed using a geometric mean.
Also, Bond bankers are willing to accept a loss on TIPS, because a fair number of them are betting the opposite of inflation: the potential of deflation between 2008 and 2012.
When big banks were buying up US Treasuries constantly because they're worried about deflation... to the point where some bonds are offering a negative return... the switch of Monetary Policy that favors inflation is the obvious move. Notice: Gold Dropped in value since last year, while big investors continue to run towards the safety of US Treasuries... pushing yields to absolute lows. Why? Because during 2012, the major banks and investors were worried about deflation risk.
Buying commodities and gold when there is considerable deflation risk is dumb.
According to wikipedia: "The core CPI index excludes goods with high price volatility, such as food and energy. This measure of core inflation systematically excludes food and energy prices because, historically, they have been highly volatile and non-systemic. More specifically, food and energy prices are widely thought to be subject to large changes that often fail to persist and do not represent relative price changes."
The Core CPI is used to calculate "Core Inflation," which is the main thing that the Federal Reserve tries to monitor.
See http://en.wikipedia.org/wiki/Core_inflation. So although there are alternative CPIs which do include food and energy prices, they are not as important to the people making monetary policy in the United States.
I'm not really sure what you're trying to show with that graph of deflation probabilities. If I'm reading it right, the probability of deflation through 2017 is currently 0%. Since the year is currently 2013, the "probability of deflation between 2008 and 2012" is also 0%, since I just lived through those years, and... it didn't happen.
The reason why people were buying treasury bonds in 2008-2012 is because the rest of the economy was imploding and they wanted a safe port in the storm. I lived through those years and so did you. You ought to know this already.
I don't really know what else to say. If you think it's a good idea to buy a bunch of treasury bonds with super-low interest rates in 2013, knock yourself out! I think anyone with an ounce of sense can see that our government is going to inflate away its debts over the next few years. In the meantime, you'll be helping to keep USGov in the black, so... thanks, I guess.
So... what does "Core CPI" have to do with anything? I have never used that value in my argument, and have instead preferred CPI-U and CPI-W. These CPI are used for Social Security, Minimum Wage calculations, and so forth.
You're creating the ultimate strawman. You're ignoring the statistics I've presented (statistics using "real" CPI which include food values), and then criticizing statistics that I'm not using. Why don't you read my argument?
Second, even including food prices / energy prices, there were periods of deflation through 2008. Yes, I lived through those periods, do you know what happened to bond investments during that time? I got something like a 20% gain during that period of deflation while the rest of the market crashed.
Anyway, this is the free market. You can continue to invest into Gold if you think its best! We'll both know the answer in a year, so there's no real need to argue about it.
What does this have to do with anything? Let's ask wikipedia.
The Federal Reserve's policy of ignoring food and energy prices when making interest rate decisions is often confused with the Bureau of Labor Statistics' measurement of the CPI. The BLS publishes both a headline CPI which counts food and energy prices, and also a CPI for All Items Less Food and Energy, or "Core" CPI. None of the prominent legislated uses of the CPI excludes food and energy.[9] However, with regard to calculating inflation, the Federal Reserve no longer uses the CPI, preferring to use core PCE instead.
So the people making the monetary policy decisions are ignoring food and energy prices, and hence, in my opinion, underestimating inflation.
Anyway, as someone else said in this thread, everything is a good investment at some period in time. The question is whether we are in that period of time.
ftp://ftp.bls.gov/pub/special.requests/cpi/cpiri2010.txt
Food: 14.792% Housing: 41.460% Fuel: 5.079% Energy (included inside of "housing category"): 5.096%
If you're curious, you can further subdivide that into milk and eggs. But the list becomes way too unwieldy at that point. The averages are then computed using a geometric mean.
Also, Bond bankers are willing to accept a loss on TIPS, because a fair number of them are betting the opposite of inflation: the potential of deflation between 2008 and 2012.
http://www.nber.org/papers/w14701 http://www.frbatlanta.org/research/inflationproject/dp/
When big banks were buying up US Treasuries constantly because they're worried about deflation... to the point where some bonds are offering a negative return... the switch of Monetary Policy that favors inflation is the obvious move. Notice: Gold Dropped in value since last year, while big investors continue to run towards the safety of US Treasuries... pushing yields to absolute lows. Why? Because during 2012, the major banks and investors were worried about deflation risk.
Buying commodities and gold when there is considerable deflation risk is dumb.