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Yet somehow our consumer price index shows inflation rising at only 2%

by gzu 7y ago

lotsofpulp 7y ago
I’ve never paid attention to that number. Housing in desirable areas with economic opportunities, education, and healthcare are all understated. I prefer to use SP500 as my benchmark for what I need to keep up with since I am betting the US government will keep devaluing the USD to keep inflating asset values.
tom_mellior 7y ago
As the article notes, some things like consumer electronics are still getting cheaper.
- cco 7y ago
  File those under "basically irrelevant" in my opinion. Once you have a relatively cheap phone, you're basically satisfied your Maslow hierarchy for technology, i.e. you can accomplish most of the requirements of existing as a digital citizen albeit you may not be as efficient as those with more devices. The real labor saving devices, dishwasher, clothes washer, refrigerator etc. were/are very meaningful but haven't moved much in the last 20 years. Education, housing, food, clothing, etc. are far more important and relevant to what it means to live a decent life in the 21st century.
  - deleted 7y ago
    [deleted]
  - tom_mellior 7y ago
    I agree that you don't need a TV and I don't have one either. But other people keep buying them anyway, so it makes sense to include them in a statistical measure of average households.
- C1sc0cat 7y ago
  Which is why they are added when new and expensive - it flatters the real inflation measures and saves governments money longer term.
- lonelappde 7y ago
  This is the evil of fiscal policy. Inflation is targeted not at 2%, but 2% plus erasing all the non-fiscal economoc gains of improved technology.
  - dragonwriter 7y ago
    > This is the evil of fiscal policy. Inflation is targeted not at 2%, but 2% plus erasing all the non-fiscal economoc gains of improved technology. This is a very confused comment. The part that's coherent enough to clearly identify what is wrong is that it refers to “fiscal policy” when it means “monetary policy”, which is the policy targeted at particular inflation rates. But even aside from that, the whole claim is incoherent.
    - mindslight 7y ago
      The comment may be poorly worded, but the point is sound. Every bit of technological progress or economic optimization should result in naturally decreasing prices, just as we've come to expect in the technology sector. This goes for both offshoring in general as well as Walmart's replacement of locally-run businesses. Lower consumer prices would help make up for the reduced demand for labor. But rather than this being allowed to just happen, the overt policy is to keep labor from realizing these gains so that everyone keeps working "full time".
      - dragonwriter 7y ago
        > Every bit of technological progress or economic optimization should result in naturally decreasing prices Not in dollar terms, especially when dollars are being deliverately managed so that the dollar cost of a labor hour increases over time. In terms of labor-hours, sure. > Lower consumer prices would help make up for the reduced demand for labor. No, lower nominal (dollar) prices would not. Lower real prices are an incoherent concept. Lower labor-hour-equivalent prices would if and only if lower labor demand meant equal employment but reduced hours, otherwise it would just exacerbate the tangible inequality resulting from reduced labor demand. > But rather than this being allowed to just happen, the overt policy is to keep labor from realizing these gains so that everyone keeps working "full time". But, it's not: that's not what targeting low positive inflation is. That would only be the overt policy if there was an overt policy to reatrict real wage gains. While I do think (at least large portions of) one of the two major parties is actively and deliberately pursuing policies with that goal, it's very much not an overt policy.
curlypaul924 7y ago
Do you believe the CPI is a good measure of inflation?
- Jorge1o1 7y ago
  Hypothetically, the Core PCE would be a better metric of inflation, but Core Urban Consumer NSA CPI works pretty well. It has some flaws, like failing to take into account new products or improvements in products, as well as being susceptible to swings in volatile food and energy prices. But Core CPI excludes the more volatile pieces and I think it’s a reasonably good indicator. Perhaps my single biggest gripe with CPI is that it fails to properly reflect changes in housing prices, because of how infrequently people sell/buy their house, and because in some parts of the country nobody rents, so price discovery is a little wonky in those places.
Jorge1o1 7y ago
Not only is 2% a fairly tepid number, we’ve had to cut rates, make promises to “sustain the expansion”, stop the tapering of The Fed’s balance sheet just to get that 2%. All throughout 2013-2017, the CPI number has hovered either close to 2% or been below it. Keep in mind that the Fed’s goal is symmetric, meaning that to make up for the times when CPI is below 2%, there needs to be other times when CPI is above 2%. It blows my mind that throughout the late 80s and 90s we were hitting anywhere from 3-5% and now we’re struggling to get 2%.
RonaldSchleifer 7y ago
Once you look at the revised numbers and you then start unpacking all the lies contained in the CPI you start understanding that it's a literal con job, a trick of confidence. There are some people who try to provide alternative accurate information to the government's data, and it consistently shows far less rosy numbers that also match the historical record far closer.

Yet somehow our consumer price index shows inflation rising at only 2%

by gzu 7y ago

Yet somehow our consumer price index shows inflation rising at only 2%

I’ve never paid attention to that number. Housing in desirable areas with economic opportunities, education, and healthcare are all understated. I prefer to use SP500 as my benchmark for what I need to keep up with since I am betting the US government will keep devaluing the USD to keep inflating asset values.

tom_mellior 7y ago

As the article notes, some things like consumer electronics are still getting cheaper.

cco 7y ago
File those under "basically irrelevant" in my opinion. Once you have a relatively cheap phone, you're basically satisfied your Maslow hierarchy for technology, i.e. you can accomplish most of the requirements of existing as a digital citizen albeit you may not be as efficient as those with more devices. The real labor saving devices, dishwasher, clothes washer, refrigerator etc. were/are very meaningful but haven't moved much in the last 20 years. Education, housing, food, clothing, etc. are far more important and relevant to what it means to live a decent life in the 21st century.
- deleted 7y ago
  [deleted]
- tom_mellior 7y ago
  I agree that you don't need a TV and I don't have one either. But other people keep buying them anyway, so it makes sense to include them in a statistical measure of average households.
C1sc0cat 7y ago
Which is why they are added when new and expensive - it flatters the real inflation measures and saves governments money longer term.
lonelappde 7y ago
This is the evil of fiscal policy. Inflation is targeted not at 2%, but 2% plus erasing all the non-fiscal economoc gains of improved technology.
- dragonwriter 7y ago
  > This is the evil of fiscal policy. Inflation is targeted not at 2%, but 2% plus erasing all the non-fiscal economoc gains of improved technology. This is a very confused comment. The part that's coherent enough to clearly identify what is wrong is that it refers to “fiscal policy” when it means “monetary policy”, which is the policy targeted at particular inflation rates. But even aside from that, the whole claim is incoherent.
  - mindslight 7y ago
    The comment may be poorly worded, but the point is sound. Every bit of technological progress or economic optimization should result in naturally decreasing prices, just as we've come to expect in the technology sector. This goes for both offshoring in general as well as Walmart's replacement of locally-run businesses. Lower consumer prices would help make up for the reduced demand for labor. But rather than this being allowed to just happen, the overt policy is to keep labor from realizing these gains so that everyone keeps working "full time".
    - dragonwriter 7y ago
      > Every bit of technological progress or economic optimization should result in naturally decreasing prices Not in dollar terms, especially when dollars are being deliverately managed so that the dollar cost of a labor hour increases over time. In terms of labor-hours, sure. > Lower consumer prices would help make up for the reduced demand for labor. No, lower nominal (dollar) prices would not. Lower real prices are an incoherent concept. Lower labor-hour-equivalent prices would if and only if lower labor demand meant equal employment but reduced hours, otherwise it would just exacerbate the tangible inequality resulting from reduced labor demand. > But rather than this being allowed to just happen, the overt policy is to keep labor from realizing these gains so that everyone keeps working "full time". But, it's not: that's not what targeting low positive inflation is. That would only be the overt policy if there was an overt policy to reatrict real wage gains. While I do think (at least large portions of) one of the two major parties is actively and deliberately pursuing policies with that goal, it's very much not an overt policy.

curlypaul924 7y ago

Do you believe the CPI is a good measure of inflation?

Jorge1o1 7y ago
Hypothetically, the Core PCE would be a better metric of inflation, but Core Urban Consumer NSA CPI works pretty well. It has some flaws, like failing to take into account new products or improvements in products, as well as being susceptible to swings in volatile food and energy prices. But Core CPI excludes the more volatile pieces and I think it’s a reasonably good indicator. Perhaps my single biggest gripe with CPI is that it fails to properly reflect changes in housing prices, because of how infrequently people sell/buy their house, and because in some parts of the country nobody rents, so price discovery is a little wonky in those places.

Jorge1o1 7y ago

Not only is 2% a fairly tepid number, we’ve had to cut rates, make promises to “sustain the expansion”, stop the tapering of The Fed’s balance sheet just to get that 2%. All throughout 2013-2017, the CPI number has hovered either close to 2% or been below it. Keep in mind that the Fed’s goal is symmetric, meaning that to make up for the times when CPI is below 2%, there needs to be other times when CPI is above 2%. It blows my mind that throughout the late 80s and 90s we were hitting anywhere from 3-5% and now we’re struggling to get 2%.

RonaldSchleifer 7y ago

Once you look at the revised numbers and you then start unpacking all the lies contained in the CPI you start understanding that it's a literal con job, a trick of confidence. There are some people who try to provide alternative accurate information to the government's data, and it consistently shows far less rosy numbers that also match the historical record far closer.