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What if, as an engineer, you were forced to work with a measuring tape whose graduations change all the time? As a matter of fact, what if you were ask to buil

What if, as an engineer, you were forced to work with a measuring tape whose graduations change all the time? As a matter of fact, what if you were ask to build things using a measuring tape with graduations that are increasingly far apart over time? I'd wager you would be a little upset and quickly ask for a proper measuring tape so you could do your job properly. Sounds reasonable, right? However, the exact same thing is happening in economics: everything is measured with a measuring stick whose length changes all the time. And this does not seem to worry anyone: economists merrily keep on measuring things like household debt in USD and everyone seem to agree it's the right way to work. A good and proper shared hallucination. Worse, the length of the measuring stick is changed, not in a random fashion, but in a way that makes the power that be look good on TV. Once in a while, people try to do the right thing and present inflation-corrected numbers, but that's far from being the norm.

zefool 6y ago
Worse even: the measuring stick for inflation suffers the same disease! The most used measuring stick is the CPI, which (1) does not include e.g. assets, and (2) whose definition also changes significantly over time. So it arguably does not even measure total inflation, and on top of that is not really the same metric every year. So not only does your measuring stick shrink and expand, it is not even possible to measure by how much.
- gruez 6y ago
  >The most used measuring stick is the CPI, which (1) does not include e.g. assets Why does this matter? If your cost of living stays the same but TSLA/BTC jump up 10x why should that count as inflation?
  - zefool 6y ago
    Simple: this state of affairs is only possible when consumer products and necessities are not scarce. When scarcity comes into play, well, then it does not matter whether the dollars you are competing with come from the "real economy" or bitcoin. Prices will shoot up.
- imtringued 6y ago
  CPI inflation tracks the labor market very well. CPI inflation is about the actual working economy. Not some bubble fantasy numbers on some bank accounts. Yeah, everyone knows that the fantasy economy is growing. Everyone also knows that the real economy is not growing as fast as it should but you wouldn't know that if you didn't have CPI inflation.
julienb_sea 6y ago
This is a strange outlook, many of the metrics in the linked article actually use inflation-corrected numbers. There are obvious pitfalls about not adjusting for inflation which economists are aware of. It's also not difficult to find economic analyses critical of the "powers that be".

zefool 6y ago

Worse even: the measuring stick for inflation suffers the same disease! The most used measuring stick is the CPI, which (1) does not include e.g. assets, and (2) whose definition also changes significantly over time. So it arguably does not even measure total inflation, and on top of that is not really the same metric every year. So not only does your measuring stick shrink and expand, it is not even possible to measure by how much.

gruez 6y ago
>The most used measuring stick is the CPI, which (1) does not include e.g. assets Why does this matter? If your cost of living stays the same but TSLA/BTC jump up 10x why should that count as inflation?
- zefool 6y ago
  Simple: this state of affairs is only possible when consumer products and necessities are not scarce. When scarcity comes into play, well, then it does not matter whether the dollars you are competing with come from the "real economy" or bitcoin. Prices will shoot up.
imtringued 6y ago
CPI inflation tracks the labor market very well. CPI inflation is about the actual working economy. Not some bubble fantasy numbers on some bank accounts. Yeah, everyone knows that the fantasy economy is growing. Everyone also knows that the real economy is not growing as fast as it should but you wouldn't know that if you didn't have CPI inflation.

julienb_sea 6y ago

This is a strange outlook, many of the metrics in the linked article actually use inflation-corrected numbers. There are obvious pitfalls about not adjusting for inflation which economists are aware of. It's also not difficult to find economic analyses critical of the "powers that be".