SOS What effect CPI on fiat money

1992 the breakdown of spending was 15% food, 10% recreation, 25% housing, 5% apparel, 15% transportation, 10% medical care, 5% education and 15%

Let us analyse a little bit:

For Malaysia (for 2010)

Food prices - increases average 8-12%

Recreation - increases about 5%

Housing - 10-15%

Apparel - 0-2%

Transportation - 5-8%

Medical care - 10%

Education - 5%

Others

So technically speaking, we can conclude the average inflation in Malaysia is 8%-10% p.a.

As for USA it would be similar, other than the rest, the housing prices is dropping. Should we measure some major expenses of a family the following the the big ticket items:

1. House
2. Car
3. Education
4. Food
5. Entertainment & recreation
6. Insurance
7. Medical

Most will realise, once you have both car and house, your inflation profile change immediately, if you do not have a child, then your inflation is confine to FOOD, Entertainment, Medical and Insurance. You will then notice an increase, which is not really represented by the CPI.

MyView

Each individual or family have different set of INFLATION. Hence it is very much depends on lifestyle, his needs and necessities. Whatever the case may be, one will reaslise the unofficial INFLATION is always higher than the Official inflation which is reported. Hence, one will have to measure the inflation that applies, because, a guy who travels a lot, then his inflation is mainly, currency, food, travelling costs, air port tax, etc.

MEASURE IT TO YOUR OWN PROFILE. So, technically, Fiat Money is not a good store of money, especially when most central banks starts printing money. One should consider investment into perceived "REAL MONEY" which is precious metal (for long run like 10 - 30 years).