6 ms·

Inflation data: https://www.in2013dollars.com/us/inflation/2010?amount=1 https://www.in2013dollars.com/us/inflation/2010?amount=1. I don't think that a 20% dif

Inflation data: https://www.in2013dollars.com/us/inflation/2010?amount=1 https://www.in2013dollars.com/us/inflation/2010?amount=1. I don't think that a 20% difference means 200K is a lot less. It's a bit less.

john_moscow 6y ago
Sure, rice, jeans and dollar store trinkets have only become 20% more expensive. The real estate, healthcare and education tell a completely different story though.
deleted 6y ago
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internetslave 6y ago
I don’t trust any inflation numbers. Financial asset inflation is out of control
mgolawala 6y ago
Unfortunately, for the last few years I have noticed more and more people no longer take government inflation data very seriously. Here are two (I am sure there are more) reasons why: Housing, Health and Education.. these very basic needs have consistently outstripped official inflation numbers. Specifically on the US coasts. Correct me if I am wrong, but I believe the cost of housing is completely left out of that inflation number. Which in my opinion is kind of silly. The formula for the index used considers substitutions. So for example, let's say Wool gets expensive, they expect you to substitute it for acrylic. If beef gets expensive, they expect you to substitute it for chicken or turkey, and so on. This isn't the reality people _feel_. For example, I for one, would realize I am no longer able to afford wool socks, and have to make do with acrylic socks. In essence, feeling poorer than I did before.
- mdorazio 6y ago
  CPI and inflation metrics generally do account for housing costs [1], but the problem is inflation in housing is not evenly distributed. If you live in a coastal city or tech hub, your housing costs have likely risen much faster than the national average. I've found it difficult to get realistic measures of city-level inflation data without trying to construct my own index from various data sources. [1] https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-and-rent.pdf https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-an...
- candiodari 6y ago
  That's not really how substitutions work. Substitutions work by replacing what people used to buy with what people buy now. Now your criticism remains valid, to a slightly lesser extent, because if everyone gets poorer and trades wool for acrylic socks, they get replaced in the basket. Not to artificially depress inflation, but to reflect what everyone (now poorer) actually buys. The issue is, obviously you need substitutions. The finance example is going to be horses, so let's go with that. Nobody buys or rents horses anymore. They are exclusively the domain of recreation. So having them in the index would be lunacy. One measure people use is the "big mac inflation index", a PPP index. That one would tell you that inflation between 2010 to 2020 is about 76%, or indeed 5.8% per year average. But that's how the FED chairman Powell (and all those before) will dress it up these days.
bondarchuk 6y ago
But that is the government inflation, which is considered by some to be fake. Shadowstats [1] says inflation would be about 5%/year if we use the same methodology as in 1990, which gives about 60% over 10 years, i.e. you'd have to make 320k now. I'm just eyeballing the chart but if we use the 1980 method (~7% a year) it's almost 100% (i.e. you'd have to make 400k now). For another example, Dow Jones with dividends reinvested gives a 180% increase, i.e. you'd have to make 560k. Of course this is not really inflation, but it gives a sense of how much you're missing out on vs. asset owners (please correct me if this is massively wrong). [1] http://www.shadowstats.com/alternate_data/inflation-charts http://www.shadowstats.com/alternate_data/inflation-charts
- TheTrotters 6y ago
  Well, yes, if you accept some official-inflation-is-fake conspiracy theory as a premise you can reach many interesting conclusions.
  - ClumsyPilot 6y ago
    Its not fit for purpose, just like the fact that we celebrate increasing GDP while life expectancy has been stagnant or declining
  - frongpik 6y ago
    It's not conspiracy, but an observation that hamburgers, cars, houses and yachts inflate at different rates. The gov inflation concerns hamburgers, but someone's making 200k really needs housing and that inflates much faster.
    - TheTrotters 6y ago
      1. Rents are included in the CPI. 2. This confuses relative price changes with inflation.
      - dominotw 6y ago
        > 1. Rents are included in the CPI. Rents have remained low in my city but housing prices( which GP is talking about) have gone up over 30% last 2 years. Its pretty easy to find a rental but almost impossible to buy a house here.
bufordtwain 6y ago
Inflation measurements should be tied to location because housing costs vary dramatically and are a huge proportion of expenditure for most people.
- whimsicalism 6y ago
  At the same time, differing costs of living reflect differing values. The reason the Bay Area is so much more expensive than Tulsa, Oklahoma is because many people would much prefer to live in the Bay. Adjusting completely for COL ignores the reality that living in the Bay is, to some extent, a luxury.

john_moscow 6y ago

Sure, rice, jeans and dollar store trinkets have only become 20% more expensive. The real estate, healthcare and education tell a completely different story though.

deleted 6y ago

[deleted]

internetslave 6y ago

I don’t trust any inflation numbers. Financial asset inflation is out of control

mgolawala 6y ago

Unfortunately, for the last few years I have noticed more and more people no longer take government inflation data very seriously. Here are two (I am sure there are more) reasons why: Housing, Health and Education.. these very basic needs have consistently outstripped official inflation numbers. Specifically on the US coasts. Correct me if I am wrong, but I believe the cost of housing is completely left out of that inflation number. Which in my opinion is kind of silly. The formula for the index used considers substitutions. So for example, let's say Wool gets expensive, they expect you to substitute it for acrylic. If beef gets expensive, they expect you to substitute it for chicken or turkey, and so on. This isn't the reality people _feel_. For example, I for one, would realize I am no longer able to afford wool socks, and have to make do with acrylic socks. In essence, feeling poorer than I did before.

mdorazio 6y ago
CPI and inflation metrics generally do account for housing costs [1], but the problem is inflation in housing is not evenly distributed. If you live in a coastal city or tech hub, your housing costs have likely risen much faster than the national average. I've found it difficult to get realistic measures of city-level inflation data without trying to construct my own index from various data sources. [1] https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-and-rent.pdf https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-an...
candiodari 6y ago
That's not really how substitutions work. Substitutions work by replacing what people used to buy with what people buy now. Now your criticism remains valid, to a slightly lesser extent, because if everyone gets poorer and trades wool for acrylic socks, they get replaced in the basket. Not to artificially depress inflation, but to reflect what everyone (now poorer) actually buys. The issue is, obviously you need substitutions. The finance example is going to be horses, so let's go with that. Nobody buys or rents horses anymore. They are exclusively the domain of recreation. So having them in the index would be lunacy. One measure people use is the "big mac inflation index", a PPP index. That one would tell you that inflation between 2010 to 2020 is about 76%, or indeed 5.8% per year average. But that's how the FED chairman Powell (and all those before) will dress it up these days.

bondarchuk 6y ago

But that is the government inflation, which is considered by some to be fake. Shadowstats [1] says inflation would be about 5%/year if we use the same methodology as in 1990, which gives about 60% over 10 years, i.e. you'd have to make 320k now. I'm just eyeballing the chart but if we use the 1980 method (~7% a year) it's almost 100% (i.e. you'd have to make 400k now). For another example, Dow Jones with dividends reinvested gives a 180% increase, i.e. you'd have to make 560k. Of course this is not really inflation, but it gives a sense of how much you're missing out on vs. asset owners (please correct me if this is massively wrong). [1] http://www.shadowstats.com/alternate_data/inflation-charts http://www.shadowstats.com/alternate_data/inflation-charts

TheTrotters 6y ago
Well, yes, if you accept some official-inflation-is-fake conspiracy theory as a premise you can reach many interesting conclusions.
- ClumsyPilot 6y ago
  Its not fit for purpose, just like the fact that we celebrate increasing GDP while life expectancy has been stagnant or declining
- frongpik 6y ago
  It's not conspiracy, but an observation that hamburgers, cars, houses and yachts inflate at different rates. The gov inflation concerns hamburgers, but someone's making 200k really needs housing and that inflates much faster.
  - TheTrotters 6y ago
    1. Rents are included in the CPI. 2. This confuses relative price changes with inflation.
    - dominotw 6y ago
      > 1. Rents are included in the CPI. Rents have remained low in my city but housing prices( which GP is talking about) have gone up over 30% last 2 years. Its pretty easy to find a rental but almost impossible to buy a house here.

bufordtwain 6y ago

Inflation measurements should be tied to location because housing costs vary dramatically and are a huge proportion of expenditure for most people.

whimsicalism 6y ago
At the same time, differing costs of living reflect differing values. The reason the Bay Area is so much more expensive than Tulsa, Oklahoma is because many people would much prefer to live in the Bay. Adjusting completely for COL ignores the reality that living in the Bay is, to some extent, a luxury.