Day 61: The Consumer Price Index (CPI)

The consumer price index – or short ‘CPI’, is used to measure changes in the price level of goods and services purchased by households, and is also used to measure inflation.

To measure the CPI, a study is done that investigates what the ‘average’ household (of the particular country for which the CPI is being measured) buys / spends money on in terms of goods and services. We are in essence working with an imaginary shopping basket/cart which has a whole bunch of stuff in it which is supposed to represent what a typical household spends money on.

When constructing the CPI, a few things are taken into consideration:

• Goods and services which should be in the ‘basket’
•  What weight should be assigned to each good/service (to  indicate its relative importance in the basket -- eg. Food over perfume)
• What base year is going to be used
• What formula is going to be used
• Prices have to be collected each month to calculate the value of the CPI for that month (as it gets published monthly)

For the first two points, in-depth surveys are undertaken to determine the relative weights, and the goods and services which should be included. Since this type of research is quite time-consuming, it only gets done every five years or so.

The base year reflects the year within which the initial survey/study was done to establish the CPI, and will be the year to which other CPI’s will be compared to.

Let’s look at a simplified version of the process:

In Country X consumers only purchase water and bread, where the ‘average’ consumer will purchase 10 bottles of water and 5 loaves of bread in a given period of time(“years”). Next we look at the prices for these items within each time period.

Year	Price of water	Price of bread
2005	$1	$3
2006	$2	$4
2007	$3	$5

Now we calculate each basket’s cost per time period:

2005: (10 x $1) + (5 x $3) = $25
2006: (10 x $2) + (5 x $4) = $40
2007: (10 x $3) + (5 x $5) = $55

Next we pick a base year, and calculate the CPI – we’ll use 2005 as our base year.
The CPI for 2005 is ($25/$25) x 100 = 100              (cost now/cost base year) x 100
The CPI for 2006 is ($40/$25) x 100 = 160
The CPI for 2007 is ($55/$25) x 100 = 220

To see how much prices increased from time period to time period – we simply subtract a 100 (= base year index) from the comparison year. So if we are using 2007 as our comparison year, we can conclude that the prices increased 120% from 2005 to 2007.

Different CPI’s will be measured for different expenditure groups such as: pensioners, urban wage earners, different provincial/metropolitan areas etc.

Since food, energy, housing and mortgage rates will usually take up quite a bit of ‘weight’ within the ‘basket’ – changes in the prices concerning these will have the biggest impact on changes in CPI.

The CPI gives a good indication in terms of increasing prices, but you can’t use it to measure the cost of living, since the CPI works with a ‘fixed basket’ – while the cost of living will change as people will substitute items for one another as prices move higher / lower (so for instance, if coffee becomes more expensive and tea cheaper, people will start substituting coffee with tea, and so try and maintain the same expenditure level, rather than just going with a ‘fixed basket’ and being non-responsive to price changes). The CPI also does not take into account the introduction of new items. If for instance internet was just introduced in the year 2006 in Country X, it would not yet be included in the CPI for the next couple of years until a new basket survey is done, and so internet prices would not be accounted for until the new survey is done. Another point which is not covered is that of quality. If bread became more nutritious but cost the same, the cost of living would remain the same while living standards would go up.

There's not much to this point, it's just one of those things we've made up to 'measure' and 'evaluate' our economy' while in no way whatsoever measuring anything real, since our economy is all about infinite growth. 

Since we're living in a world of major inequality, the CPI will also in most cased not really be representative -- as with any 'average', you're just drawing the two polarities together (extremely rich and extremely poor) and so you're not really working with anything which really represents the 'cost of living' within this world, since the majority of people are not living an average life -- but a life of misery. This 'misery' is easy to hide away in averages as the abundance of the rich will quickly "balance" this misery out in numbers. When looking at for instance per capita income, you are also working with averages. So if you have ten people in a group, and 9 out of ten earn $1000 per year and one of the ten makes $100 000 (eg small wealth elite scenario) -- you get a per capita income of $10 900, which is the 'average', but completely not representative. And so with any model in economy where one work with 'averages' you're always working with a misleading picture which will always portray things to be better for the "average person" than what they really are.

Day 10: The Goodness of Man is a FairyTale we Tell our Children so they can Sleep at Night

I forgive myself for accepting and allowing myself to believe in the goodness of man.

I forgive myself for accepting and allowing myself to believe that there is just this little spark of goodness left in man.

I forgive myself for not accepting and allowing myself to realise that if a spark of goodness existed in man, this goodness would be reflected in our world.

I forgive myself for not accepting and allowing myself to realise that if there were a spark of goodness in man, poverty would not exist.

I forgive myself for not accepting and allowing myself to realise that if there were a spark of goodness in man, prostitution would not exist.

I forgive myself for not accepting and allowing myself to realise that if there were a spark of goodness in man, child pornography would not exist.

I forgive myself for not accepting and allowing myself to realise that if there were a spark of goodness in man, money would not be the motivator of life.

I forgive myself for not accepting and allowing myself to realise that if there were a spark of goodness in man, all men would be equal.

I forgive myself for not accepting and allowing myself to realise that if there were a spark of goodness in man, the cries of the suffering would be heard and addressed with the re-organisation and re-desingning of our economic system.

I forgive myself for not accepting and allowing myself to realise that if there were a spark of goodness in man, animals and nature would be honoured as the source of all human material well-being.

I forgive myself for not accepting and allowing myself to realise that if there were a spark of goodness in man, common sense would be the common language and no wars would be waged over differing opinions, beliefs and interests.

I forgive myself for not accepting and allowing myself to realise that if there were a spark of goodness in man, murder would not exist.

I forgive myself for not accepting and allowing myself to realise that if there were a spark of goodness in man, suicide would not exist.

I forgive myself for not accepting and allowing myself to realise that if there were a spark of goodness in man, cancer would not exist.

I forgive myself for not accepting and allowing myself to realise that if there were a spark of goodness in man, the best health care would be available to all.

I forgive myself for not accepting and allowing myself to realise that if there were a spark of goodness in man, children would not turn on their parents.

I forgive myself for not accepting and allowing myself to realise that if there were a spark of goodness in man, the world would not be destroyed in the name of money.

I forgive myself for not accepting and allowing myself to realise that if there were a spark of goodness in man, gossip would not exist.

I forgive myself for not accepting and allowing myself to realise that if there were a spark of goodness in man, backchat would not exist.

I forgive myself for not accepting and allowing myself to realise that if there were a spark of goodness in man, people would be the same within as without.

I forgive myself for not accepting and allowing myself to realise that if there were a spark of goodness in man, the arrogance of the ludicrous idea that technology can replace all natural capital would not exist.

I forgive myself for not accepting and allowing myself to realise that if there were a spark of goodness in man, we wouldn't owe our life to a system where we have to labour for most of the years we have to enjoy the last few in old age.

I forgive myself for not accepting and allowing myself to realise that if there were a spark of goodness in man, debt would not exist.

I forgive myself for not accepting and allowing myself to realise that if there were a spark of goodness in man, political corruption would not exist.

I forgive myself for not accepting and allowing myself to realise that if there were a spark of goodness in man, consumption would not define a man's value.

I forgive myself for not accepting and allowing myself to realise that if there were a spark of goodness in man, no abuse would exist.

I forgive myself for not accepting and allowing myself to realise that if there were a spark of goodness in man, euthanasia would be legal everywhere.

I forgive myself for not accepting and allowing myself to realise that if there were a spark of goodness in man, animals would not be abused and tortured in the name of profit.

I forgive myself for not accepting and allowing myself to realise that if there were a spark of goodness in man, there would be no guns.

I forgive myself for not accepting and allowing myself to realise that if there were a spark of goodness in man, brainwashing through school, media and advertisement would not exist.

I forgive myself for not accepting and allowing myself to realise that if there were a spark of goodness in man, all parents would first educate themselves on how to educate a child before even considering to have a child.

I forgive myself for not accepting and allowing myself to realise that if there were a spark of goodness in man, a job would not be a prerequisite for survival.

I forgive myself for not accepting and allowing myself to realise that if there were a spark of goodness in man, we would not be obsessed with finding love and kindness in another.

I forgive myself for not accepting and allowing myself to realise that if there were a spark of goodness in man, an equal money system would already be in place.

I forgive myself for not accepting and allowing myself to realise that if there were a spark of goodness in man, direct political participation would form part of everyone's daily life.

I forgive myself for not accepting and allowing myself to realise that if there were a spark of goodness in man, poison would not be used as a cheap way to make food taste sweet in order to make big profits.

I forgive myself for not accepting and allowing myself to realise that if there were a spark of goodness in man, only the best and most efficient products would be produced in order to not deplete natural resources at an unsustainable rate.

I forgive myself for not accepting and allowing myself to realise that if there were a spark of goodness in man, each one would love their neighbour as themselves.

I commit myself to expose the evil nature of man that denies the right to life.

I commit myself to expose the evil nature of man that allows millions to suffer for the abundance of a few.

I commit myself to expose the evil nature of man where each man is only willing to think of himself.

I commit myself to expose the evil nature of man that continuous destroying Earth in the face of the disasters this has already proven to bring about.

I commit myself to the re-education of mankind through exposure of what is being accepted and allowed and the offering of alternative solutions that work for all.

I commit myself to the death of mankind as what man currently exists as and the re-birthing of a new form of humankind that considers all life equally at all times, creating a world that supports and benefits everyone - manifesting heaven on Earth.