4 ms·

And now it is the bond bubble. Currently still in the phase of minority coverage.

mistermann 9y ago
What's the story behind that? Back in 2008ish when I used to follow this more closely, the conspiracy-theorist-sphere (the same people who told us the housing bubble was real, big, and about to pop) were discussing how interest rates were artificially low due to the US Treasury and mysterious offshore funds basically dominating the market. No idea if that's still the case but I often wonder how we can have skyrocketing prices across so many asset classes yet near zero inflation. For example, Statistics Canada shows next to no inflation in the CPI component for shelter in BC: http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/econ157k-eng.htm http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/e... Whereas actual prices look more like this: http://news.buzzbuzzhome.com/2018/01/chart-greater-vancouver-prices-climbed-4-decades.html http://news.buzzbuzzhome.com/2018/01/chart-greater-vancouver... Obvious blatant lying (obvious because of the actual data, but also because it's mathematically impossible (after adjusting for interest rate differential) to have 10%+ annual price increases in the most expensive asset class for over a decade, no decrease in spending in other sectors, zero wage growth, and zero inflation), but good luck finding someone that works for a mainstream newspaper to print an article pointing that out.
- mindslight 9y ago
  > I often wonder how we can have skyrocketing prices across so many asset classes yet near zero inflation Well for one, the inflating assets aren't directly part of the CPI. And to the extent they are (eg bankrent on a new home purchase), they only apply to the sliver of people who just bought a house. Furthermore one would expect the long term CPI trend to be downwards, due to technological progress and economic evolution. So the fact that we are not seeing that is indicative of huge inflation. eg Walmart hollowed out the economy by providing things "cheaper", and they did. But rather than this actually benefiting people (who should have to work less to afford those goods), even taken at its face value the CPI feedback system guarantees people's costs stay the same, meanwhile there are fewer jobs.
  - mistermann 9y ago
    > Well for one, the inflating assets aren't directly part of the CPI. And to the extent they are (eg bankrent on a new home purchase), they only apply to the sliver of people who just bought a house. I would agree with you, if not for: - CPI is supposed to measure inflation - if the effects of monetary inflation (due to excessively free credit) in the largest household expense category by far are completely masked by the typical slow turnover of that asset, shouldn't that be accommodated in the calculation (again, keeping in mind what the advertised intent of the CPI is)? - Despite the slow turnover, you would expect the increases to show up eventually, would you not? - I can't find the link today, but in the past I discovered in the methodology description that index measurements are deliberately chosen outside major cities, as the prices there are "too volatile" and therefore "not representative" of overall prices (ignoring both population concentration, and the fact that we well know more and more of the population is moving to the major cities) > Furthermore one would expect the long term CPI trend to be downwards, due to technological progress and economic evolution. So the fact that we are not seeing that is indicative of huge inflation. Agreed, except for the people who are spending >= 50% of their take home pay on rent. If this very serious state of affairs isn't reflected in the CPI numbers, then I suggest we start a public debate on shutting that government department down so we can at least save citizens a few dollars on taxes, because I can't see what value it is providing beyond misleading propaganda.

What's the story behind that? Back in 2008ish when I used to follow this more closely, the conspiracy-theorist-sphere (the same people who told us the housing bubble was real, big, and about to pop) were discussing how interest rates were artificially low due to the US Treasury and mysterious offshore funds basically dominating the market. No idea if that's still the case but I often wonder how we can have skyrocketing prices across so many asset classes yet near zero inflation. For example, Statistics Canada shows next to no inflation in the CPI component for shelter in BC: http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/econ157k-eng.htm http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/e... Whereas actual prices look more like this: http://news.buzzbuzzhome.com/2018/01/chart-greater-vancouver-prices-climbed-4-decades.html http://news.buzzbuzzhome.com/2018/01/chart-greater-vancouver... Obvious blatant lying (obvious because of the actual data, but also because it's mathematically impossible (after adjusting for interest rate differential) to have 10%+ annual price increases in the most expensive asset class for over a decade, no decrease in spending in other sectors, zero wage growth, and zero inflation), but good luck finding someone that works for a mainstream newspaper to print an article pointing that out.

mindslight 9y ago
> I often wonder how we can have skyrocketing prices across so many asset classes yet near zero inflation Well for one, the inflating assets aren't directly part of the CPI. And to the extent they are (eg bankrent on a new home purchase), they only apply to the sliver of people who just bought a house. Furthermore one would expect the long term CPI trend to be downwards, due to technological progress and economic evolution. So the fact that we are not seeing that is indicative of huge inflation. eg Walmart hollowed out the economy by providing things "cheaper", and they did. But rather than this actually benefiting people (who should have to work less to afford those goods), even taken at its face value the CPI feedback system guarantees people's costs stay the same, meanwhile there are fewer jobs.
- mistermann 9y ago
  > Well for one, the inflating assets aren't directly part of the CPI. And to the extent they are (eg bankrent on a new home purchase), they only apply to the sliver of people who just bought a house. I would agree with you, if not for: - CPI is supposed to measure inflation - if the effects of monetary inflation (due to excessively free credit) in the largest household expense category by far are completely masked by the typical slow turnover of that asset, shouldn't that be accommodated in the calculation (again, keeping in mind what the advertised intent of the CPI is)? - Despite the slow turnover, you would expect the increases to show up eventually, would you not? - I can't find the link today, but in the past I discovered in the methodology description that index measurements are deliberately chosen outside major cities, as the prices there are "too volatile" and therefore "not representative" of overall prices (ignoring both population concentration, and the fact that we well know more and more of the population is moving to the major cities) > Furthermore one would expect the long term CPI trend to be downwards, due to technological progress and economic evolution. So the fact that we are not seeing that is indicative of huge inflation. Agreed, except for the people who are spending >= 50% of their take home pay on rent. If this very serious state of affairs isn't reflected in the CPI numbers, then I suggest we start a public debate on shutting that government department down so we can at least save citizens a few dollars on taxes, because I can't see what value it is providing beyond misleading propaganda.