4 ms·

I'm not saying the article is wrong in general, but I don't get this last bit: > The government isn’t suppressing the “actual” inflation number. And if they we

I'm not saying the article is wrong in general, but I don't get this last bit: > The government isn’t suppressing the “actual” inflation number. And if they were, they would also be suppressing reported economic growth... Surely by suppressing inflation they are increasing reported economic growth. If the dollar value of the economy increases 10% with no inflation, then that's 10% growth, but if inflation was also 10%, then that's 0% real growth. So if the economy grows at the same dollar rate, but you manipulate the inflation number lower, you get more apparent real growth.

swiley 6y ago
Isn't the federal reserve intentionally propping up markets? I thought in one of the reports they argued that there was higher inflation but it was restricted to certain markets like housing and so over all inflation was ~2%.
- tomatocracy 6y ago
  Not sure it's a case of intentionally propping up equity markets (of course interest rate policy directly impacts on government bond markets although I don't think that would normally be described as propping them up). But the phenomenon has been around for a while - I've heard it called "biflation" - high inflation in some markets/products (asset markets in general, as well as some services), alongside deflation in others like imported goods with not many goods/services actually following the middle road which the official inflation statistics give as an average. It's exaggerated to some extent but it's definitely there.
jdblair 6y ago
I think his point is that the same source numbers are used to calculate both inflation and GDP. If you suppress inflation by undervaluing goods and services you also suppress GDP. You could get away with divergence if your didn't provide your data, but at least in the US, you can see all the input data.

4 ms·

I'm not saying the article is wrong in general, but I don't get this last bit: > The government isn’t suppressing the “actual” inflation number. And if they we

by rjmunro 6y ago

swiley 6y ago
Isn't the federal reserve intentionally propping up markets? I thought in one of the reports they argued that there was higher inflation but it was restricted to certain markets like housing and so over all inflation was ~2%.
- tomatocracy 6y ago
  Not sure it's a case of intentionally propping up equity markets (of course interest rate policy directly impacts on government bond markets although I don't think that would normally be described as propping them up). But the phenomenon has been around for a while - I've heard it called "biflation" - high inflation in some markets/products (asset markets in general, as well as some services), alongside deflation in others like imported goods with not many goods/services actually following the middle road which the official inflation statistics give as an average. It's exaggerated to some extent but it's definitely there.
jdblair 6y ago
I think his point is that the same source numbers are used to calculate both inflation and GDP. If you suppress inflation by undervaluing goods and services you also suppress GDP. You could get away with divergence if your didn't provide your data, but at least in the US, you can see all the input data.