5 ms·

Housing, healthcare, education and childcare costs matter. I don’t believe CPI is accurately capturing the skyrocketing costs of these things, which are the mo

by danhak 6y ago

Housing, healthcare, education and childcare costs matter. I don’t believe CPI is accurately capturing the skyrocketing costs of these things, which are the most significant expenses for most households.

arcticbull 6y ago
And yet you and everyone else are unable to produce any meaningful sources or analysis that justify your beliefs. [citation needed] and we can talk about it. Healthcare is a social policy matter, not monetary policy, and nothing to do with increase in the money supply. You take that up with your representatives not the Fed. Housing is a function of city council zoning policy. You take that up with your city council not the Fed, or with the federal government it you want Japanese style zoning rules. [1] Childcare is social policy, not monetary policy, and you take that up with your representatives not the Fed. You can't just point to anything you don't like and say the Fed Did It or is responsible for it. All they do is control the money supply. Nothing more. A reduction in your welfare isn't inflation. Necessities can outpace inflation. It's bad social policy, but it happens. What you fail to understand is that these prices will continue to outstrip a platonic ideal even if denominated in Bitcoin because the increase in pricing has nothing to do with monetary policy. Any temporary reprieve is due to speculative mania. [1] http://urbankchoze.blogspot.com/2014/04/japanese-zoning.html http://urbankchoze.blogspot.com/2014/04/japanese-zoning.html
- chordalkeyboard 6y ago
  > the increase in pricing has nothing to do with monetary policy. This is incorrect.
  - arcticbull 6y ago
    Inflation adjusted $/sqft on average across the US housing costs exactly the same as it did in the 1970s. With interest rates 1/5 of what they were back then, each square foot is actually much more affordable. I admit I misspoke, because of course, monetary policy controls interest rates, but I maintain that a change in affordability is not dominated by inflation but rather other social policies. Houses are twice is big and families are 20% smaller. Happy to debate more but [citation needed]. [1] https://fee.org/articles/new-homes-today-have-twice-the-square-feet-per-person-as-in-1973/ https://fee.org/articles/new-homes-today-have-twice-the-squa...
    - chordalkeyboard 6y ago
      > Inflation adjusted $/sqft on average across the US housing costs exactly the same as it did in the 1970s. > Inflation adjusted Inflation is a result of monetary policy. So when you’ve adjusted the price for the monetary policy, you see that 50 years of capital accumulation and efficiency has been soaked up by monetary policy. > I admit I misspoke, because of course, monetary policy controls interest rates, but I maintain that a change in affordability is not dominated by inflation but rather other social policies. Houses are twice is big and families are 20% smaller. Things are supposed to get cheaper as capital accumulates. Social policies undoubtedly have an effect. So does increasing the money supply. An increase in the number of currency units necessarily causes each unit to be worth less, ceteris paribus. > Happy to debate more but [citation needed]. I’m not sure how to proceed. The notion that one could print money and have each currency unit correspond to the same amount of physical goods is prima facie false.
      - arcticbull 6y ago
        > "I’m not sure how to proceed. The notion that one could print money and have each currency unit correspond to the same amount of physical goods is prima facie false." No, it's not, you're looking at half the equation. Value of money is a function of both supply and velocity. If velocity drops but supply increases commensurately, each unit of currency corresponds to the same amount of physical goods. [1] This should be dead obvious to you, as the money supply doubled last year but the price of Apples went up 2%. Not 100%. Same with the entire CPI basket. Housing actually got cheaper. Rent went down a ton. > Inflation is a result of monetary policy. So when you’ve adjusted the price for the monetary policy, you see that 50 years of capital accumulation and efficiency has been soaked up by monetary policy. We are talking in constant dollars that have a 0% notional rate of inflation. That's what inflation-adjusted means in this context. What do you mean by "50 years of capital accumulation"? People don't accumulate or hold dollars for exactly this reason. They accumulate and hold assets and value, whose performance matches or exceeds inflation. > Things are supposed to get cheaper as capital accumulates. Social policies undoubtedly have an effect. So does increasing the money supply. An increase in the number of currency units necessarily causes each unit to be worth less, ceteris paribus. I'm not sure what that means. Things aren't supposed to get anything as capital accumulates. An increase in number of currency units may or may not cause each unit to be worth less, as velocity is the missing half of the equation. With that in mind the goal is each unit to be worth 2% less each year, to incentivize higher velocity of money and investment. It's a straw man to say that your buying power drops 2% each year as a result of inflation. You're only penalized for inflation for the period between you receiving the dollars and using them to purchase assets whose performance exceeds inflation. [1] https://www.investopedia.com/terms/v/velocity.asp https://www.investopedia.com/terms/v/velocity.asp
  - deleted 6y ago
    [deleted]
- danhak 6y ago
  > Housing is a function of city council zoning policy... This is the laughably reductionist take that predictably appears on HN when folks think the dynamics of San Francisco apply everywhere. Housing costs have nothing to do with the Fed? Really? You don’t believe record low mortgage rates are driving demand at all? Nah, it must be city council zoning policy that is sending home prices soaring all over the country—-even in rural and unincorporated areas.
  - arcticbull 6y ago
    I'm sorry you're just wrong about that though. On average, the price per square foot of housing in the US is exactly the same now as it was in the 1970s, on an inflation adjusted basis. [1] In major metros, that number is higher, because of city policy, but on average, the number is flat. That means on an inflation adjusted basis in rural areas houses are cheaper per square foot. Once you take into account that interest rates are about 1/5th of what they were back then, it's clear, housing is actually more affordable now than it ever was (per square foot). Yes, zoning matters in rural areas. Minimum size rules, minimum setback rules -- all sorts of code changes -- have conspired alongside the 20% decrease in average family size and the changing tastes for more space, to make houses twice as big. Same price per square foot -- or lower! -- Twice as big. Twice as expensive. I was wrong to say it has "nothing" to do with it, but it is by far not the dominant force as evidenced by the numbers. If you're unhappy about poor folks not being able to afford the houses that's again social policy not monetary policy. I am too. But inflation isn't why. By all means have at those windmills though, and please, cite your sources so we can have a debate on facts. [edit] You're missing my point. Pricing in metros is more expensive because of council policy. Pricing outside the city is higher because they're twice as big. End of story. Please CITE YOUR SOURCES. This. Is. Not. Inflation. You having a worse quality of life is not inflation. Yes, white flight may or may not contribute to it. That's not Fed policy. That's social policy. And that's my point. [1] https://fee.org/articles/new-homes-today-have-twice-the-square-feet-per-person-as-in-1973/ https://fee.org/articles/new-homes-today-have-twice-the-squa...
    - deleted 6y ago
      [deleted]

by danhak 6y ago

arcticbull 6y ago

And yet you and everyone else are unable to produce any meaningful sources or analysis that justify your beliefs. [citation needed] and we can talk about it. Healthcare is a social policy matter, not monetary policy, and nothing to do with increase in the money supply. You take that up with your representatives not the Fed. Housing is a function of city council zoning policy. You take that up with your city council not the Fed, or with the federal government it you want Japanese style zoning rules. [1] Childcare is social policy, not monetary policy, and you take that up with your representatives not the Fed. You can't just point to anything you don't like and say the Fed Did It or is responsible for it. All they do is control the money supply. Nothing more. A reduction in your welfare isn't inflation. Necessities can outpace inflation. It's bad social policy, but it happens. What you fail to understand is that these prices will continue to outstrip a platonic ideal even if denominated in Bitcoin because the increase in pricing has nothing to do with monetary policy. Any temporary reprieve is due to speculative mania. [1] http://urbankchoze.blogspot.com/2014/04/japanese-zoning.html http://urbankchoze.blogspot.com/2014/04/japanese-zoning.html

chordalkeyboard 6y ago
> the increase in pricing has nothing to do with monetary policy. This is incorrect.
- arcticbull 6y ago
  Inflation adjusted $/sqft on average across the US housing costs exactly the same as it did in the 1970s. With interest rates 1/5 of what they were back then, each square foot is actually much more affordable. I admit I misspoke, because of course, monetary policy controls interest rates, but I maintain that a change in affordability is not dominated by inflation but rather other social policies. Houses are twice is big and families are 20% smaller. Happy to debate more but [citation needed]. [1] https://fee.org/articles/new-homes-today-have-twice-the-square-feet-per-person-as-in-1973/ https://fee.org/articles/new-homes-today-have-twice-the-squa...
  - chordalkeyboard 6y ago
    > Inflation adjusted $/sqft on average across the US housing costs exactly the same as it did in the 1970s. > Inflation adjusted Inflation is a result of monetary policy. So when you’ve adjusted the price for the monetary policy, you see that 50 years of capital accumulation and efficiency has been soaked up by monetary policy. > I admit I misspoke, because of course, monetary policy controls interest rates, but I maintain that a change in affordability is not dominated by inflation but rather other social policies. Houses are twice is big and families are 20% smaller. Things are supposed to get cheaper as capital accumulates. Social policies undoubtedly have an effect. So does increasing the money supply. An increase in the number of currency units necessarily causes each unit to be worth less, ceteris paribus. > Happy to debate more but [citation needed]. I’m not sure how to proceed. The notion that one could print money and have each currency unit correspond to the same amount of physical goods is prima facie false.
    - arcticbull 6y ago
      > "I’m not sure how to proceed. The notion that one could print money and have each currency unit correspond to the same amount of physical goods is prima facie false." No, it's not, you're looking at half the equation. Value of money is a function of both supply and velocity. If velocity drops but supply increases commensurately, each unit of currency corresponds to the same amount of physical goods. [1] This should be dead obvious to you, as the money supply doubled last year but the price of Apples went up 2%. Not 100%. Same with the entire CPI basket. Housing actually got cheaper. Rent went down a ton. > Inflation is a result of monetary policy. So when you’ve adjusted the price for the monetary policy, you see that 50 years of capital accumulation and efficiency has been soaked up by monetary policy. We are talking in constant dollars that have a 0% notional rate of inflation. That's what inflation-adjusted means in this context. What do you mean by "50 years of capital accumulation"? People don't accumulate or hold dollars for exactly this reason. They accumulate and hold assets and value, whose performance matches or exceeds inflation. > Things are supposed to get cheaper as capital accumulates. Social policies undoubtedly have an effect. So does increasing the money supply. An increase in the number of currency units necessarily causes each unit to be worth less, ceteris paribus. I'm not sure what that means. Things aren't supposed to get anything as capital accumulates. An increase in number of currency units may or may not cause each unit to be worth less, as velocity is the missing half of the equation. With that in mind the goal is each unit to be worth 2% less each year, to incentivize higher velocity of money and investment. It's a straw man to say that your buying power drops 2% each year as a result of inflation. You're only penalized for inflation for the period between you receiving the dollars and using them to purchase assets whose performance exceeds inflation. [1] https://www.investopedia.com/terms/v/velocity.asp https://www.investopedia.com/terms/v/velocity.asp
- deleted 6y ago
  [deleted]
danhak 6y ago
> Housing is a function of city council zoning policy... This is the laughably reductionist take that predictably appears on HN when folks think the dynamics of San Francisco apply everywhere. Housing costs have nothing to do with the Fed? Really? You don’t believe record low mortgage rates are driving demand at all? Nah, it must be city council zoning policy that is sending home prices soaring all over the country—-even in rural and unincorporated areas.
- arcticbull 6y ago
  I'm sorry you're just wrong about that though. On average, the price per square foot of housing in the US is exactly the same now as it was in the 1970s, on an inflation adjusted basis. [1] In major metros, that number is higher, because of city policy, but on average, the number is flat. That means on an inflation adjusted basis in rural areas houses are cheaper per square foot. Once you take into account that interest rates are about 1/5th of what they were back then, it's clear, housing is actually more affordable now than it ever was (per square foot). Yes, zoning matters in rural areas. Minimum size rules, minimum setback rules -- all sorts of code changes -- have conspired alongside the 20% decrease in average family size and the changing tastes for more space, to make houses twice as big. Same price per square foot -- or lower! -- Twice as big. Twice as expensive. I was wrong to say it has "nothing" to do with it, but it is by far not the dominant force as evidenced by the numbers. If you're unhappy about poor folks not being able to afford the houses that's again social policy not monetary policy. I am too. But inflation isn't why. By all means have at those windmills though, and please, cite your sources so we can have a debate on facts. [edit] You're missing my point. Pricing in metros is more expensive because of council policy. Pricing outside the city is higher because they're twice as big. End of story. Please CITE YOUR SOURCES. This. Is. Not. Inflation. You having a worse quality of life is not inflation. Yes, white flight may or may not contribute to it. That's not Fed policy. That's social policy. And that's my point. [1] https://fee.org/articles/new-homes-today-have-twice-the-square-feet-per-person-as-in-1973/ https://fee.org/articles/new-homes-today-have-twice-the-squa...
  - deleted 6y ago
    [deleted]