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Inflation. For whatever reason inflation has been very slow for some time now. If it ever starts to speed up, the fed will tighten the monetary supply quickly t

Inflation. For whatever reason inflation has been very slow for some time now. If it ever starts to speed up, the fed will tighten the monetary supply quickly to keep it under control.

lotsofpulp 6y ago
My taxes, land for a home purchase, out of pocket maximum and deductibles for health insurance, health insurance premiums, tuition are all increasing at quite a clip for me. I have to save an increasing proportion of income due to higher (perceived) volatility of future income, as well as the expected increasing prices in the aforementioned expenses. Sure doesn't feel like inflation is slow to me.
- AnotherGoodName 6y ago
  This year has quite simply broken the way the CPI works. They try not to re-weight items in the CPI year by year. Motor fuel is still 2.9% of the index. Transportation, including air travel is still 5% of the index. Demand and price for these has crashed this year. They still keep the same weighting year in year out since the items in the CPI aren't meant to be changed and re-weighted every year. (See the Oct 2019 vs Oct 2020 column) https://www.bls.gov/news.release/cpi.t01.htm https://www.bls.gov/news.release/cpi.t01.htm
  - User23 6y ago
    Stated bluntly, low CPI is just a function of Chinese dumping and has been for the past couple decades at least.
  - howlgarnish 6y ago
    Demand for air travel has collapsed. Prices have not, because airline have correctly figured out that the few people still flying (particularly internationally) are doing so because they have to and will pay top dollar if they need to.
- onlyrealcuzzo 6y ago
  Tuition, health insurance, and deductibles ARE included in CPI. Taxes largely aren't - unless you're talking about sales taxes. Land prices definitely are not. And you are literally doing the opposite of buying something when you save, so that is also (obviously) not included in CPI. What inflation "feels like" and the CPI are completely different things. This is becoming more problematic if you're on the wrong side of the trade (i.e. saving cash instead of swimming in a mountain of mortgage debt).
  - lotsofpulp 6y ago
    I don’t save in cash, my savings are in various investments such as equity index funds or businesses and real estate. But every year a dollar seems to buy less of what I need, and I can’t imagine how people who earn far less than me can deal with it. If you don’t keep investing, you certainly are falling further and further behind, but how can you invest if you’re just making ends meet as it is.
    - Red_Leaves_Flyy 6y ago
      >I can’t imagine how people who earn far less than me can deal with it Succinctly? [Under/un]treated mental illness due to the maladaptive coping skills needed to survive as a poor American. Poor people make sacrifices to live another day. Whether it's (healthy) food, exercise, healthcare (who can afford insulin or an epipen these days?), or their time. Some people pay the doctors to go to them, others pay for people to do the tediousstuff like cooking or cleaning or laundry or fighting the bank over a $40 overdraft fee that ate that weeks food budget.
- imtringued 6y ago
  Central banks only care about consumer inflation and if you have to save an increasing proportion of income instead of spending it on consumer goods that is by definition consumer deflation. You have less and less money remaining to spend on consumer goods which means that demand for consumer goods falls flat. The irony is that overinflated assets can allocate more money away from consumer goods to assets and thereby fuel even more consumer deflation despite expanding the money supply.

Inflation. For whatever reason inflation has been very slow for some time now. If it ever starts to speed up, the fed will tighten the monetary supply quickly to keep it under control.

lotsofpulp 6y ago

My taxes, land for a home purchase, out of pocket maximum and deductibles for health insurance, health insurance premiums, tuition are all increasing at quite a clip for me. I have to save an increasing proportion of income due to higher (perceived) volatility of future income, as well as the expected increasing prices in the aforementioned expenses. Sure doesn't feel like inflation is slow to me.

AnotherGoodName 6y ago
This year has quite simply broken the way the CPI works. They try not to re-weight items in the CPI year by year. Motor fuel is still 2.9% of the index. Transportation, including air travel is still 5% of the index. Demand and price for these has crashed this year. They still keep the same weighting year in year out since the items in the CPI aren't meant to be changed and re-weighted every year. (See the Oct 2019 vs Oct 2020 column) https://www.bls.gov/news.release/cpi.t01.htm https://www.bls.gov/news.release/cpi.t01.htm
- User23 6y ago
  Stated bluntly, low CPI is just a function of Chinese dumping and has been for the past couple decades at least.
- howlgarnish 6y ago
  Demand for air travel has collapsed. Prices have not, because airline have correctly figured out that the few people still flying (particularly internationally) are doing so because they have to and will pay top dollar if they need to.
onlyrealcuzzo 6y ago
Tuition, health insurance, and deductibles ARE included in CPI. Taxes largely aren't - unless you're talking about sales taxes. Land prices definitely are not. And you are literally doing the opposite of buying something when you save, so that is also (obviously) not included in CPI. What inflation "feels like" and the CPI are completely different things. This is becoming more problematic if you're on the wrong side of the trade (i.e. saving cash instead of swimming in a mountain of mortgage debt).
- lotsofpulp 6y ago
  I don’t save in cash, my savings are in various investments such as equity index funds or businesses and real estate. But every year a dollar seems to buy less of what I need, and I can’t imagine how people who earn far less than me can deal with it. If you don’t keep investing, you certainly are falling further and further behind, but how can you invest if you’re just making ends meet as it is.
  - Red_Leaves_Flyy 6y ago
    >I can’t imagine how people who earn far less than me can deal with it Succinctly? [Under/un]treated mental illness due to the maladaptive coping skills needed to survive as a poor American. Poor people make sacrifices to live another day. Whether it's (healthy) food, exercise, healthcare (who can afford insulin or an epipen these days?), or their time. Some people pay the doctors to go to them, others pay for people to do the tediousstuff like cooking or cleaning or laundry or fighting the bank over a $40 overdraft fee that ate that weeks food budget.
imtringued 6y ago
Central banks only care about consumer inflation and if you have to save an increasing proportion of income instead of spending it on consumer goods that is by definition consumer deflation. You have less and less money remaining to spend on consumer goods which means that demand for consumer goods falls flat. The irony is that overinflated assets can allocate more money away from consumer goods to assets and thereby fuel even more consumer deflation despite expanding the money supply.