Thread: 30K Investment
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Old 11-01-2013, 10:43 PM   #29
GamerSg
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Join Date: Jul 2005
Posts: 22
Why CPI might fail to capture the true rate of Inflation in Singapore.
The reason why CPI did not capture an inflation rate of 12.2% [used compound interest rate calculator]I believe is because the increase M1 (or M2/3) need not affect the CPI: e.g. it can inflate gold and property prices either locally or abroad: thus the Singapore CPI might not register it depending on the definitions used in ascertaining the CPI (e.g. gold prices might not be represented and the property price used within the CPI might be shifted fr Orchard to somewhere in Sembawang for instance(extreme case))-
Yes, that is true. CPI is a horrible gauge for cost of living. All governments are known to massage CPI figures, worse being US.(Should not be too hard to find info on how they reduce reported CPI.)

Regarding where money flows, i agree fully and so does Marc Faber. The following video is very informative IMO.
https://www.youtube.com/watch?v=65SH35IMzlI

one should perhaps look at the gini coefficient for the increase inequality although even that is an inadequate marker since it only reflects salary, not property ownership.
I hold the view that monetary expansion transfers wealth from the poor and middle class to the wealthy. First to the banks which create the vast majority of money in the system and charge interest on it and then to the wealthy who can obtain loans from the banks at favorable terms to buy up assets.

Also, as scientific progress advances, basic necessities (which make up much of the CPI) might remain readily available (quality isn't defined in the CPI I believe)- yet even though CPI might remain unchanged, the wealth divide might worsen- this has destabilizing effects upon society and can ultimately explode as civil war, revolution.
I believe such an outcome is inevitable in US, leading to hyperinflation within this decade, possibly even within next 3 years.
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