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CPI is a joke, they do something called hedonic adjustments to things like tech products etc. It's completely subjective and BS. Technology is deflationary, thi
by whoisninja 6y ago
CPI is a joke, they do something called hedonic adjustments to things like tech products etc. It's completely subjective and BS. Technology is deflationary, things should get cheaper because we go after producing them in creative ways one demand is high.
CPI is absurd, it only perpetuates consumerism and punishes savers.
We product 2x the food society consumes - mostly wasted away, just with some supply chain efficiency - there's a lot more room for food not to be expensive though.
- ErikAugust 6y agoReal question that nobody has yet answered: With what data CPI is even calculated? The data sources are all hidden. Related: https://news.ycombinator.com/item?id=26259279 https://news.ycombinator.com/item?id=26259279
- whoisninja 6y agoKeynesian economics kool-aid, all the Phd Econ guys worship guy who had done some really shady stuff in his life. Nobel prize in economics was started by Sveriges riksbank in 1968, just to perpetuate same ideaologies. Shady af.
- seibelj 6y agoKeynes was also a child sex tourist who frequently preyed on boys, sometimes with friends https://skeptics.stackexchange.com/questions/2802/was-john-maynard-keynes-a-child-molester https://skeptics.stackexchange.com/questions/2802/was-john-m... Edit: not sure why I’m being downvoted. He admitted in his diaries as a 30 year old man he would pay for sex from 16 year olds, and referenced others as “boys” without ages. By modern standards he would be a sex offender for life. We seem to hold all historical figures by modern standards now, not sure why we give this pedophile a pass.
- finolex1 6y agoIrrelevant to the topic at hand.
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- konjin 6y ago> By modern standards he would be a sex offender for life. Age of consent in Britain in 16 and 14 in Central Europe. We also don't imprison 15 year olds for life. Not all the world suffers from Yankee puritanism to the benefit of everyone.
- eru 6y agoNon-Keynesian economists, like the neo-classicals for example or the market monetarists or even the more serious of the Austrians, don't disagree here.
- whoisninja 6y agothere's this also: https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/
- CountSessine 6y agohttps://en.m.wikipedia.org/wiki/Nixon_shock https://en.m.wikipedia.org/wiki/Nixon_shock
- fennecfoxen 6y agoThe data are all over bls.gov, in far more detail than you will find convenient for processing. See my remarks down the page: https://news.ycombinator.com/item?id=26386293 https://news.ycombinator.com/item?id=26386293 If they're not giving you a one-page report on the methodology for how they arrived at each individual point-in-time price figure that they recorded, well, I'm sorry, it's true, their methods are in that sense "hidden".
- derefr 6y agoThe input to CPI is secret shoppers visiting a variety of retail outlets, and buying things (or write down the advertised prices for things) without telling the retail outlet what they’re doing. Publishing the particular products looked at, or even the particular stores visited, would invite market manipulation of the CPI figure by re-pricing the included goods.
- kache_ 6y agoEveryone knows CPI is not analogous to reality. Why would it be. Just look at house prices
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- gruez 6y agoBecause houses are assets, which are closer to stocks than food or cars.
- throwawaygh 6y agoHousing prices reflect the cost of shelter for literally everyone who doesn't already own a house. Shelter is much closer to "food" than to "a piece of paper representing a stake in part of a corporation".
- gruez 6y ago>Housing prices reflect the cost of shelter for literally everyone who doesn't already own a house. Right, but using the raw purchase price of the house isn't a good measure. Mortgage rates dropping would cause housing prices to go up even if monthly payments stay the same. What actually matters is how much you spend per month on rent, or if you owned your house, the imputed rent. >Shelter is much closer to "food" than to "a piece of paper representing a stake in part of a corporation". From a finance perspective there's no difference between a house and a share in a corporation. They're both productive assets that provide returns. In the case of a house, it provides shelter as a service, which can either be consumed by the owner (by living it it), or by selling it (renting it out). The only difference is that with a house, the relation to you is more direct, as opposed to a tiny fraction of a multinational entity.
- throwawaygh 6y ago> What actually matters is how much you spend per month on rent, or if you owned your house, the imputed rent. Right, but in most markets rent prices track property values. The long-term upward trend in housing prices is inflation to approximately everyone who doesn't own a house. Which, significantly, includes approximately everyone under the age of 20 or not yet born. > From a finance perspective there's no difference between a house and a share in a corporation. From an investor's perspective, perhaps. But most people are not buying housing primarily as an investment. Most people are buying housing primarily as a way to shelter themselves from the elements. Consumer finance is finance.
- eru 6y agoYou might like "Less Than Zero: The Case for a Falling Price Level in a Growing Economy". Available for free online at http://www.iea.org.uk/sites/default/files/publications/files/upldbook98pdf.pdf http://www.iea.org.uk/sites/default/files/publications/files... More or less the author argues that stable nominal spending, ie a constant level of nominal GDP, is pretty much ideal. And would lead to falling prices as you suggest. If you replace constant level with 'target a level of nominal GDP that rises 4% every year' you have pretty mainstream position. Inflation measures are indeed somewhat subject. Nominal GDP has less suggement calls. (It's still useful to try and measure inflation. But perhaps it should not be a policy target.)
- whoisninja 6y agoof course Mr. Selgin is influenced by Hayek, probably worth a read. thanks for sharing
- eru 6y agoIf you are expecting pure Hayek, you are in for a ride: George Selgin is a dyed-in-the-wool fan of fractional reserve banking. (And with good reason.)
- whoisninja 6y agoah, i mean it is still ok to try to read arguments of both sides ... it's not like Hayek or people like us know it all
- eru 6y agoI wouldn't call it 'both sides'. For one, there are more than two sides. For the other, George Sergin is very much some-kind-of Austrian. Perhaps the most interesting one. See also eg https://www.alt-m.org/2015/07/29/there-was-no-place-like-canada/ https://www.alt-m.org/2015/07/29/there-was-no-place-like-can...
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- fennecfoxen 6y ago> CPI is absurd, it only perpetuates consumerism and punishes savers. Okay okay back up. The consumer price index is a series of numbers designed to help people understand what dollar-denominated figures mean to ordinary people going about their lives, spending those dollars. If that's "consumerism," well yes, it's a portrait of consumerism. Many economists, mind you, believe CPI doesn't correct quite enough, and suspect that it overstates the inflation it hopes to measure by around 1%. This is because it tracks the actual prices of a certain "market basket" of goods with specific products in it, and that basket gets out of date, as people substitute products. But if someone's "punishing savers" and "perpetuating consumerism", it's not the index, and it's not the people compiling the index, and it's not the people trying to make the index more accurate by adjusting for quality. Assign the blame where it's due. You have a beef with the Federal Reserve, and possibly with other agencies or laws which refer to the CPI to make policy.
- whoisninja 6y agodo you realize all the calculations use CPI? the bond market is highly manipulated because of that, why have a market then? why are retail accounts in germany, netherland already negative rates? does that make sense to you? can banks make money that way? danger of nationalization of banking? personal beef? no. I thought this is a forum for civil discussion and reasoning?
- smachiz 6y agoI don't really have a dog in this fight other than to point out your initial post was neither civil nor reasoned - and included not citations or facts. I'm starting to understand what you're insinuating I think, but you still haven't made your point.
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- fennecfoxen 6y ago> do you realize all the calculations use CPI? Whose calculations? The Federal Reserve's calculations? The Federal Reserve has access to a variety of data sources, and while the CPI is the one that gets the press, they also use series like the chained CPI, the producer price index, bond yield curves, unemployment (and not just U3, but things like U6 and the labor force participation rate). If all you hear about is vanilla CPI, well, that's because you're looking at a newspaper. Anyway, as I said. You have a beef with the Federal Reserve. > why are retail accounts in germany, netherland already negative rates? Public policy, as effected by the European Central Bank. Perhaps you have a beef with them too. > does that make sense to you? I mean, it makes sense as in "I understand why they do it", not as in "I think this is a great thing". > can banks make money that way? I've read that low interest rates do, in fact, squeeze their profits, though with regards to Germany the "three-pillar" system is crufty and weird and squeezes profits too. For instance, here is this lovely article I saw a while back, whose subhead notes "Low interest rates and the three-pillar system squish profits": https://www.economist.com/finance-and-economics/2019/03/02/commerzbank-and-deutsche-bank-would-gain-little-by-merging https://www.economist.com/finance-and-economics/2019/03/02/c... > danger of nationalization of banking? I'm not sure what you're talking about any more. It seems very detached from the Bureau of Labor Statistics, or European equivalent.
- dragonwriter 6y ago> CPI is a joke, they do something called hedonic adjustments to things like tech products etc. Hedonic adjustments have very minor effects on tech products (which is one of the few areas I've seen a detailed impact analysis, though not recently enough that I have it at hand.) > Technology is deflationary, things should get cheaper because we go after producing them in creative ways one demand is high. And...they do. Hedonic adjustments have an effect on how that is reflected in inflation statistics, but they don't effect the underlying processes. > CPI is absurd, it only perpetuates consumerism and punishes savers I think your are (among other errors with that description) confusing measuring inflation with policies targeting a small positive level of inflation. CPI doesn't do either of those things.
- whoisninja 6y agohttps://www.lynalden.com/november-2020-newsletter/ https://www.lynalden.com/november-2020-newsletter/
- jerry1979 6y agoThe Fed uses PCE instead of CPI in their calculations. It might make your argument more convincing if you included an critique of PCE in addition to CPI. https://www.clevelandfed.org/newsroom-and-events/publications/economic-trends/2014-economic-trends/et-20140417-pce-and-cpi-inflation-whats-the-difference.aspx https://www.clevelandfed.org/newsroom-and-events/publication...
- whoisninja 6y agodepends what you mean by "Fed uses" as blanket term TIPS use CPI like a lot of other things in bond math: https://www.treasurydirect.gov/indiv/products/prod_tips_glance.htm https://www.treasurydirect.gov/indiv/products/prod_tips_glan...
- 908B64B197 6y ago> We product 2x the food society consumes - mostly wasted away, just with some supply chain efficiency At some point if the prices rise enough it should become profitable to streamline the supply chain?
- whoisninja 6y agogood point, i hope so
- INGELRII 6y ago> Technology is deflationary, things should get cheaper because we go after producing them in creative ways one demand is high. And as a consequence the wages you earned by making tech year ago should have less value than the wage you earned today. You should expect small inflation. If you want deflationary money, wages should decline year by year. If you want to save, don't hold cash.
- whoisninja 6y agoif i want to save, don't hold cash? hold what then? become investment manager in free time instead of my day job as software developer?
- vkou 6y agoIf you want to be prudent, hold land, stocks, or bonds. Buy-and-forget with stocks, on average, outperforms both inflation, and actively managed portfolios.
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- whoisninja 6y agountil you need the money to pay big emergency bills, which at he wrong time can wipe you out no wonder there are half a million bankruptcies per year because of medical bills in the US and 40% of people have no savin and another significant portion doesn't have enough saving to spend time to invest in stocks, bonds and land(land also comes with perpetual high property taxes in most places in the US)
- vkou 6y agoIn the unlikely event you end up with giant medical bills, despite having health insurance, it doesn't matter whether your money was invested well, or poorly. The hospital will happily take every penny. For the other overwhelming majority of life events, you should invest your savings prudently, instead of stuffing them into a mattress. If you have no savings, this is a moot point - but so is inflation. Why do you care that money is losing value if you don't have any? If anything, if you are in debt, you want inflation - because it lets you inflate your debt away.
- asdff 6y agoHow do you quantify waste? If I peel a potato, is the skin factored into the waste? I think there are a lot of foods we waste simply because you can't get all the yield out of the given mass, so on paper maybe you do only use half the pumpkin after you peel it, remove the stem, take out the guts, and turn it into a pie.
- JumpCrisscross 6y ago> It's completely subjective and BS Any measure of inflation is subjective. That doesn't make it B.S. Inflation is a measure on a basket of goods. There is no single basket because people buy different things. This is why there is no single CPI statistic. Find a CPI that works for you. The federally-provided ones go as fine-grained as income bracket and metropolitan area. They're extremely precise, but may not be accurate if you have unusual purchasing habits.
- whoisninja 6y agoonly if you ignore what kind of impact this stupidity has on financial markets if you care about markets
- JumpCrisscross 6y ago> what kind of impact this stupidity has on financial markets Almost financial market professional, including those at the Fed, is tracking multiple measures of inflation.