4 ms·
> Clearly not. After you eat a bread, it's gone. After you live in a house it's still there. After you live in a house a long time it falls apart. Capital Expe
by PEJOE 6y ago
> Clearly not. After you eat a bread, it's gone. After you live in a house it's still there.
After you live in a house a long time it falls apart. Capital Expenditure restores the asset to its previous value. Bread just depreciates faster. but can still be traded, bought and sold. In Japan houses are often only ever used by one family, and the house is destroyed when the land is sold. I am taking your insistence on a cash flow perspective to its logical extreme to show that it is not always applicable.
Corn is an asset when it is bought and sold. It is food when it is consumed.
> Should farm (or food producing corporation shares) prices be factored into the CPI as well?
I clearly say at the end that if CPI is not measuring these price increases we should use a different measure. I'm not sure you understand what's going on in this conversation, but food is in the CPI.
> Also, your point about buying housing as some sort of protection against inflation doesn't tell the whole story.
Where on earth do I say this? I say that poor people are exposed to inflation the most, especially increases in housing prices. We should have measure for what working Americans are exposed to, and do not.
- gruez 6y ago>After you live in a house a long time it falls apart. Capital Expenditure restores the asset to its previous value. Bread just depreciates faster. but can still be traded, bought and sold. In Japan houses are often only ever used by one family, and the house is destroyed when the land is sold. I am taking your insistence on a cash flow perspective to its logical extreme to show that it is not always applicable. 1. the part of a house that's getting expensive isn't the house itself, it's the land. the multi-million dollar homes in san francisco would only be worth a few hundred thousand tops if they were moved to rural idaho. 2. corporations fall part too. more specifically, their physical assets (eg. machines in factories) fall apart. In both cases they're kept up by routine maintenance. The only difference is that in a corporation the maintenance is paid from revenue before profits/dividends are paid out, whereas in a house the maintenance is paid out of pocket by the owner. 3. it's not a question of deprecation. after you eat a piece of bread it's gone. that's not due to depreciation, it's due to you consuming it. >I clearly say at the end that if CPI is not measuring these price increases we should use a different measure. I'm not sure you understand what's going on in this conversation, but food is in the CPI. That's my original point. Rent (and imputed rent) is directly measured in the CPI, so there's no need to measure home prices.
- throwawaygh 6y agoI think the thing you're missing is that affordable starter housing allows people to both meet a basic need and also make an investment. Consider three people, p1, p2, p3. P1: works at job making $X and rents home entire life. P2: works at identical job making identical $X and buys + pays off identical home. P3: works at identical job making identical $X and buys + misses 10 mortgage payments on identical home. P1 is WAY better off than P2 or P3. Literally, the difference between retiring and working until you die. "can afford down-payment and also has enough stability to never miss payments" induces a VERY extreme nonlinearity in outcomes that CPI very much fails to capture. I don't think anything you've said in this thread even comes remotely close to acknowledging the reality that over half of America lives every day.