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> Incidentally, the price per kilo for air transport has doubled worldwide and Europe is increasingly resorting to the new Silk Road, which China has pushed ver

> Incidentally, the price per kilo for air transport has doubled worldwide and Europe is increasingly resorting to the new Silk Road, which China has pushed very hard: conventional road and rail transport, the prices of which have even tripled in the meantime! Especially bulky peripherals, such as PC screens, are also suffering greatly: according to a well-known brand, prices rose by 15 or 25% in France, for example. So we are told by the FED and that there is no inflation and one of the justifications to keep rates low. If this is not inflation then what is?

Enginerrrd 6y ago
I thought they explicitly said they are letting inflation run above the target value for a short period of time in order to average out to the target value since it was allegedly so low for so long. (Personally I'm not sure that it is, due to CPI changes and the like, but that's another debate.)
0xCMP 6y ago
Don't think it's relevant to the fed because it's clear there is an actual supply chain shortage which is being exaggerated by much higher than normal demand. Hence the low rates are not causing that. In fact raising rates would make it harder to borrow to increase production or to pay for the now more expensive components.
gruez 6y ago
>So we are told by the FED and that there is no inflation and one of the justifications to keep rates low. If this is not inflation then what is? Because inflation/cpi is measured using a basket of goods. pc parts being inflated by 25% doesn't mean there's 25% inflation overall. That said, the the money printing/ZIRP did cause inflation, it's just that it was mostly in assets, rather than in consumer goods hence why the cpi hasn't budged much.
frgtmypass 6y ago
I mean, if you believe the FED then you have to just dismiss this as inflation. But I think it's a lot more complicated. 1. Basket of goods doesn't include investment goods. Economists have some fancy schmancy reason for it (basically you get your money back when you sell), but I don't buy it. increasing monetary mass dilutes the purchasing power of the dollar. No one would argue that inflation doesn't increases the price of financial instruments - everyone correct returns for cpi. But we're correcting the returns with a metric that denies that those instruments can have inflation. Meanwhile, what have we seen in the past 20 years? Price of housing (not included in the cpi) and financial markets have seen great returns. This despite the '08 financial crisis. 2. Printing money isn't the only thing that affects the price of goods. The cost of producing them does as well. Inflation is hidden by the dismantling of industry. Well what have we done over the past 30 years? We've outsourced everything to countries that exploit slave labor. So if (as an example) the dollar is half as good, but the price of labor goes from 50% to 10% of the purchasing price, most of the inflation is now masked. Does the CPI track that my 1.1X more expensive sweater was made with slave labor? Or does it just track that the hourly cost of a handyman (local labor) has stagnated? Meanwhile things that cannot be off-shored have become expensive. My house. My education. My health care. 3. Hidden inflation. It is universally agreed that appliances made today are of piss poor quality. They're poorly made, with cheaper parts, and thinner sheet metal. How do you track that properly? Food packages have become smaller (rounding down when doing unit conversions is an easy freebie). A 125 g. bag of chips is a 110g. bag of chips.
- dragonwriter 6y ago
  > Basket of goods doesn't include investment goods. Economists have some fancy schmancy reason for it (basically you get your money back when you sell), but I don't buy it. The reason the basket of goods is focussed on consumer goods is because the price level of concern (where it is used, there are many other price indexes used for other purposes) is the cost of living, not cost of investing. Hence, the Consumer Price Index, the main inflation index monetary policy is concerned with. (There are also broad and industry-specific Producer Price Indexes, which are used for other purposes.) The cost of investing wouldn't be measured by asset prices, but interest rates (inverted: low interest rates are a high cost of buying future money directly, which also drives up the cost of speculative instruments which may be redeemable for money in the future.) And, yes, the cost of investing is deliberately high currently, there is no secret or conspiracy about that. It's the overt policy. > Price of housing (not included in the cpi) Cost of housing is included in the CPI (both actual and imputed rent are part of the calculation.) It's a major component of the overall CPI. [0] [0] https://arbor.com/blog/how-does-rent-factor-into-the-consumer-price-index-cpi/ https://arbor.com/blog/how-does-rent-factor-into-the-consume....
dragonwriter 6y ago
> So we are told by the FED What's that? Do you mean the Fed (short for “Federal Reserve”) > that there is no inflation The Fed doesn't produce inflation measures, it consumes them. It's the Bureau of Labor Statistics that produces the data indicating (e.g.) a 1.2% (not “no”) annual inflation by the main headline price index from Nov. 2019 through Nov. 2020. > If this is not inflation then what is? It is inflation in narrow specific markets; narrow markets often have rates of inflation very different than the broad aggregate measures. Relative prices of different goods are not fixed. Fed policy response primarily to broad price indexes, not any of the specific narrow markets you point to.

Enginerrrd 6y ago

I thought they explicitly said they are letting inflation run above the target value for a short period of time in order to average out to the target value since it was allegedly so low for so long. (Personally I'm not sure that it is, due to CPI changes and the like, but that's another debate.)

0xCMP 6y ago

Don't think it's relevant to the fed because it's clear there is an actual supply chain shortage which is being exaggerated by much higher than normal demand. Hence the low rates are not causing that. In fact raising rates would make it harder to borrow to increase production or to pay for the now more expensive components.

gruez 6y ago

>So we are told by the FED and that there is no inflation and one of the justifications to keep rates low. If this is not inflation then what is? Because inflation/cpi is measured using a basket of goods. pc parts being inflated by 25% doesn't mean there's 25% inflation overall. That said, the the money printing/ZIRP did cause inflation, it's just that it was mostly in assets, rather than in consumer goods hence why the cpi hasn't budged much.

frgtmypass 6y ago

I mean, if you believe the FED then you have to just dismiss this as inflation. But I think it's a lot more complicated. 1. Basket of goods doesn't include investment goods. Economists have some fancy schmancy reason for it (basically you get your money back when you sell), but I don't buy it. increasing monetary mass dilutes the purchasing power of the dollar. No one would argue that inflation doesn't increases the price of financial instruments - everyone correct returns for cpi. But we're correcting the returns with a metric that denies that those instruments can have inflation. Meanwhile, what have we seen in the past 20 years? Price of housing (not included in the cpi) and financial markets have seen great returns. This despite the '08 financial crisis. 2. Printing money isn't the only thing that affects the price of goods. The cost of producing them does as well. Inflation is hidden by the dismantling of industry. Well what have we done over the past 30 years? We've outsourced everything to countries that exploit slave labor. So if (as an example) the dollar is half as good, but the price of labor goes from 50% to 10% of the purchasing price, most of the inflation is now masked. Does the CPI track that my 1.1X more expensive sweater was made with slave labor? Or does it just track that the hourly cost of a handyman (local labor) has stagnated? Meanwhile things that cannot be off-shored have become expensive. My house. My education. My health care. 3. Hidden inflation. It is universally agreed that appliances made today are of piss poor quality. They're poorly made, with cheaper parts, and thinner sheet metal. How do you track that properly? Food packages have become smaller (rounding down when doing unit conversions is an easy freebie). A 125 g. bag of chips is a 110g. bag of chips.

dragonwriter 6y ago
> Basket of goods doesn't include investment goods. Economists have some fancy schmancy reason for it (basically you get your money back when you sell), but I don't buy it. The reason the basket of goods is focussed on consumer goods is because the price level of concern (where it is used, there are many other price indexes used for other purposes) is the cost of living, not cost of investing. Hence, the Consumer Price Index, the main inflation index monetary policy is concerned with. (There are also broad and industry-specific Producer Price Indexes, which are used for other purposes.) The cost of investing wouldn't be measured by asset prices, but interest rates (inverted: low interest rates are a high cost of buying future money directly, which also drives up the cost of speculative instruments which may be redeemable for money in the future.) And, yes, the cost of investing is deliberately high currently, there is no secret or conspiracy about that. It's the overt policy. > Price of housing (not included in the cpi) Cost of housing is included in the CPI (both actual and imputed rent are part of the calculation.) It's a major component of the overall CPI. [0] [0] https://arbor.com/blog/how-does-rent-factor-into-the-consumer-price-index-cpi/ https://arbor.com/blog/how-does-rent-factor-into-the-consume....

dragonwriter 6y ago

> So we are told by the FED What's that? Do you mean the Fed (short for “Federal Reserve”) > that there is no inflation The Fed doesn't produce inflation measures, it consumes them. It's the Bureau of Labor Statistics that produces the data indicating (e.g.) a 1.2% (not “no”) annual inflation by the main headline price index from Nov. 2019 through Nov. 2020. > If this is not inflation then what is? It is inflation in narrow specific markets; narrow markets often have rates of inflation very different than the broad aggregate measures. Relative prices of different goods are not fixed. Fed policy response primarily to broad price indexes, not any of the specific narrow markets you point to.