The important part of Prof. Cobbe's letter

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Posted by clyde (66.159.205.148) on February 23, 2002 at 21:11:13:

The first issue of Dr. Loenard. We know of no Dr. Leonard, but that does not mean there isn't one. What we need to impart here is his obvious lack of knowledge in the area of economics and finance. His grammar is very poor, as was his assesment of the debate.

: We looked at the entire debate from start to finish, and this is what we determined.

: Mr Young made his initial statement regarding a 127k salary in 1990 would be like a 250k salary today. Eric was 100% correct in his interpretation of his statement that it would be approk 176k. When not using specific examples, one must use hisorical inflation, or the CPI in order to calculate time value of money.

: Next, Mr. Young says he used the rule of thumb of 6%. Unfortunately, there is no rule of thumb at 6%. We have seen rule's of thumb at either 3% or 4% depending on the current interest rate environment.

: Mr. Young then gives 10 specific examples as to illustrate why he uses his "personal experience" rule of thumb. There is a flaw in this logic. In order to calculate the actual inflation rate, one must have actual records for all goods/services purchased in the specified time period (12 years in this example), and we know that this is highly unlikely. Also, Mr. Young uses only 10 examples. This is far too small a sample to use when figuring inflation on all of the goods and services used by an individual or family. That is why we use the CPI, which uses over 80,000 goods and services to calculate Inflation. We also find that Mr. Young's examples show an average inflation rate of over 7.8%, and none were for the specified time period. Therefore, we can see nothing in Mr. Young's posts that will support his extrapolation from the examples to the 6% figure for inflation.

: We also see Mr. Young using certain terms like:
: -The average increase of salaries. (This has no bearing on this matter, and Eric never used it in his posts.)
: -The rule of 72 (This is a shortcut for compounding interest. It shows doubling periods at specified interest rates, It has no bearing here).

: We find that Eric was 100% correct, not only in his calculations, but also in his interpretation. This is a very simlple economic principle. It is very cut and dry, there is no other way to interpret, or calculate it. When using a time period in the past, and without all data available (records for all purchases in the specified time period) one must use the CPI. Only when calculating the time value of money into the future can one use a rule of thumb; a 3% to 4% is acceptable, but 6% is unacceptable.

: We do not wish this to be a response with a personal undertone. We are simply stating facts. This has no bearing on any one individual, with the exception of Dr. Leonard, who is a disgace to our profession (if indeed he is a professor at all)

: What we also cant understand is why this debate has gone on for so long. Eric posted many wesite references that perfectly illustrated his point. We can only assume Mr. Young did not view these sites.

=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=
1)He debunks your fake supporter "Mr." Leonard.

2)He clearly states that your take on the matter is seriously flawed.

3)He stated the Eric is 100% correct and thereby wins the debate.

But we all knew that already anyway. Right?

Follow Ups:

Re: Re: Re: Re: Re: The important part of Prof. Cobbe's letter Keith 10:05:25 2/25/2002 (0)
Re: Re: Re: Re: The important part of Prof. Cobbe's letter jax 18:20:06 2/24/2002 (1)
Re: Re: Re: The important part of Prof. Cobbe's letter KEN YOUNG 18:00:08 2/24/2002 (2)
Re: Re: The important part of Prof. Cobbe's letter Keith 08:36:17 2/24/2002 (3)
Re: Re: The important part of Prof. Cobbe's letter clyde 06:29:09 2/24/2002 (0)
Re: The important part of Prof. Cobbe's letter KEN YOUNG 04:50:02 2/24/2002 (5)

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Subject: Re: The important part of Prof. Cobbe's letter

Comments:
: The first issue of Dr. Loenard. We know of no Dr. Leonard, but that does not mean there isn't one. What we need to impart here is his obvious lack of knowledge in the area of economics and finance. His grammar is very poor, as was his assesment of the debate. : : We looked at the entire debate from start to finish, and this is what we determined. : : Mr Young made his initial statement regarding a 127k salary in 1990 would be like a 250k salary today. Eric was 100% correct in his interpretation of his statement that it would be approk 176k. When not using specific examples, one must use hisorical inflation, or the CPI in order to calculate time value of money. : : Next, Mr. Young says he used the rule of thumb of 6%. Unfortunately, there is no rule of thumb at 6%. We have seen rule's of thumb at either 3% or 4% depending on the current interest rate environment. : : Mr. Young then gives 10 specific examples as to illustrate why he uses his "personal experience" rule of thumb. There is a flaw in this logic. In order to calculate the actual inflation rate, one must have actual records for all goods/services purchased in the specified time period (12 years in this example), and we know that this is highly unlikely. Also, Mr. Young uses only 10 examples. This is far too small a sample to use when figuring inflation on all of the goods and services used by an individual or family. That is why we use the CPI, which uses over 80,000 goods and services to calculate Inflation. We also find that Mr. Young's examples show an average inflation rate of over 7.8%, and none were for the specified time period. Therefore, we can see nothing in Mr. Young's posts that will support his extrapolation from the examples to the 6% figure for inflation. : : We also see Mr. Young using certain terms like: : : -The average increase of salaries. (This has no bearing on this matter, and Eric never used it in his posts.) : : -The rule of 72 (This is a shortcut for compounding interest. It shows doubling periods at specified interest rates, It has no bearing here). : : We find that Eric was 100% correct, not only in his calculations, but also in his interpretation. This is a very simlple economic principle. It is very cut and dry, there is no other way to interpret, or calculate it. When using a time period in the past, and without all data available (records for all purchases in the specified time period) one must use the CPI. Only when calculating the time value of money into the future can one use a rule of thumb; a 3% to 4% is acceptable, but 6% is unacceptable. : : We do not wish this to be a response with a personal undertone. We are simply stating facts. This has no bearing on any one individual, with the exception of Dr. Leonard, who is a disgace to our profession (if indeed he is a professor at all) : : What we also cant understand is why this debate has gone on for so long. Eric posted many wesite references that perfectly illustrated his point. We can only assume Mr. Young did not view these sites. : =-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-= : 1)He debunks your fake supporter "Mr." Leonard. : 2)He clearly states that your take on the matter is seriously flawed. : 3)He stated the Eric is 100% correct and thereby wins the debate. : But we all knew that already anyway. Right?

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