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Well you have to be careful with the data. Firstly, inflation stats don't track every price. In particular they don't track house prices (directly) or the pric

Well you have to be careful with the data. Firstly, inflation stats don't track every price. In particular they don't track house prices (directly) or the prices of financial instruments like debt, stocks, etc. So money printing that pours into the stock market will cause a market bubble whilst inflation stats stay stubbornly low. Secondly it's possible businesses have adapted to increased minimum wage laws by simply automating those jobs away. I see a lot of robotic airline checkin desks and McDonalds order takers these days.

JamesBarney 8y ago
They don't track financial assets because those jump around a lot based on interest rates(because of how interest rates effect future discounted cash flows). So this can give you the false impression that inflation is happening when it isn't and vice versa.
JamesBarney 8y ago
Imagine a bond pays out $10,000 in 30 years. Now if the interest rate is 0 that bond is worth $10,000. But if the interest rate is 10% then that bond is worth $573. So if the interest rate goes from 10% -> 0 we would have 1700% inflation. Which is crazy especially if all other goods and services in the economy remain unchanged.
- repolfx 8y ago
  Why would that be crazy? Isn't that a circular definition of crazyness? Inflation is whatever statisticians say it is - if inflation stats were very different to how they are now, why would that would be crazy? Maybe it's crazy that we constantly read about asset bubbles yet inflation stays flat? The intuitive definition would imply inflation should swing up and down wildly given the huge size of the bubbles in question. In reply to your second post, which I think is essentially the same as this one, it makes no sense to say it'd give "a false impression inflation is happening". Inflation is whatever set of prices we want to include. If we arbitrarily exclude some because we think inflation stats should look a certain way, that's the tail wagging the dog - this data exists to inform decision making, not tell us what we want to see.

JamesBarney 8y ago

They don't track financial assets because those jump around a lot based on interest rates(because of how interest rates effect future discounted cash flows). So this can give you the false impression that inflation is happening when it isn't and vice versa.

JamesBarney 8y ago

Imagine a bond pays out $10,000 in 30 years. Now if the interest rate is 0 that bond is worth $10,000. But if the interest rate is 10% then that bond is worth $573. So if the interest rate goes from 10% -> 0 we would have 1700% inflation. Which is crazy especially if all other goods and services in the economy remain unchanged.

repolfx 8y ago
Why would that be crazy? Isn't that a circular definition of crazyness? Inflation is whatever statisticians say it is - if inflation stats were very different to how they are now, why would that would be crazy? Maybe it's crazy that we constantly read about asset bubbles yet inflation stays flat? The intuitive definition would imply inflation should swing up and down wildly given the huge size of the bubbles in question. In reply to your second post, which I think is essentially the same as this one, it makes no sense to say it'd give "a false impression inflation is happening". Inflation is whatever set of prices we want to include. If we arbitrarily exclude some because we think inflation stats should look a certain way, that's the tail wagging the dog - this data exists to inform decision making, not tell us what we want to see.