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> For much of human history we pooped in the street and murdered each other with reckless abandon. I'm not sure the rose colored glasses mean much here. Is thi

• arcticbull 5y ago
  > Is this a straw man or a red herring? Try to avoid your logical fallacies on HN, regardless. Neither, I was pointing out that just because we used to do things a certain way doesn't meant they were inherently better. In fact, "for much of human history" things were much worse, and we were approaching them in ways that are by and large inferior. This is a kind of declinism bias or rosy retrospection bias. [1] > There is a reason. Normal, hard-working people can thrive under that simple system, and wealth inequality does not systematically increase to the betterment of the financially savvy. You're once again missing the forest for the trees. The unit itself doesn't matter. How much of it you have matters and what you put it to work doing matters. > Where have you been? I don't know metric you are using to define stability, but keep in mind bear markets are the only periods in American history where wealth inequality reliably decreases as capital is reallocated. Boom and bust cycles under the gold standard were dramatically exaggerated, in part because no entity could stabilize the medium of exchange. As bad as 2008 was, I guarantee you the Great Depression was worse. > Betterment, which you linked, is a free market solution to a policy problem, but it's about 50 years too late, and unless they capture 100% market share, they aren't going to solve the problem going forward (and of course they will scoop some nice fees off your savings). It's not a public policy problem, it's a public policy solution. Your job in a capitalist economy is to allocate capital to the most productive investment. If you choose to abdicate that responsibility you can pay a fee to Wealthfront of Betterment to do it for you, or you can pay a 2% per annum fee and keep it at home. However, money only has value when it changes hands, not when its jammed under your gramma's mattress. Inflation encourages investment to keep capital flow moving. GDP is in fact money supply times velocity. This is how the economy functions. > All of your points hinge on CPI being a correct measure of inflation. It isn't. > The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them. Changes in the CPI are used to assess price changes associated with the cost of living. The CPI is one of the most frequently used statistics for identifying periods of inflation or deflation. [2] [1] https://en.wikipedia.org/wiki/Declinism https://en.wikipedia.org/wiki/Declinism [2] https://www.investopedia.com/terms/c/consumerpriceindex.asp https://www.investopedia.com/terms/c/consumerpriceindex.asp
• arcticbull 5y ago
  Btw, re: #2, you linked to a Forbes opinion piece. Forbes opinion section is basically a glorified Medium. Not only is that write-up from 2004, so almost 18 years old, it was written by someone unaffiliated with Forbes. I would encourage you to put as much stock in a Forbes opinion piece as something you read on Medium. In a lot of was its worse because it lends them the credibility of Forbes - but you wouldn't believe the garbage you find mixed in there.
  • lend000 5y ago
    Some people would naturally respond to the content of the article. Others would naturally appeal to authority or ad hominem the author. Some food for thought. CPI ostensibly worked the same way in 2004, by the way. Based on your other comment linking the definition of CPI, it seems like you have no idea how it's calculated. Even I didn't know the details until recently -- I just knew the numbers weren't matching up with my models and very obvious price data. So here's how it works. In the US, a consumer expenditure survey is obtained by the BLS [0]. This determines what items account for typical Americans' spending, and in what quantity, to determine weights [1]. Price data is obtained, with in-house selected indices and hedonic adjustments [2]. These prices are multiplied against the weights, summed, and reflected as a ratio compared to the previous year. The Wikipedia page provides a nice summary [3]. What is the problem with this? Well, the problem is in the consumer expenditure survey. If wealth inequality is stagnant, this is actually a decent measure of inflation in so far as it affects people's personal expenses. However, if wealth inequality is increasing (and the assets and expenses of the wealthy are not factored into this survey, which they are not), inflation can only increase so much as median Americans' wages increase (plus their debt). When prices are increasing, Americans buy dramatically different amounts of the expensive items (you can see that in the weights in [1] in the mid 2000's when gas prices varied significantly) to fit their budget, under-weighting the items that are manifesting high inflation. Inaccurate hedonic adjustments and any other adjustments done behind closed doors could also account for why CPI veers so far from independently calculated inflation measures like the Big Mac Index, but the core of the problem is that the inflation weights are reactionary to inflation and there isn't much of a delay on letting weights change each year. So, that is why real wages adjusted for "inflation" is a straight line. [0] https://www.bls.gov/cex/ https://www.bls.gov/cex/ [1] https://www.bls.gov/cpi/tables/relative-importance/2019.pdf https://www.bls.gov/cpi/tables/relative-importance/2019.pdf [2] https://www.bls.gov/cpi/quality-adjustment/questions-and-answers.htm\ https://www.bls.gov/cpi/quality-adjustment/questions-and-ans... [3] https://en.wikipedia.org/wiki/United_States_Consumer_Price_Index https://en.wikipedia.org/wiki/United_States_Consumer_Price_I...
• imtringued 5y ago
  >Which is exactly what is happening in our inflationary utopia you are describing. Unfortunately, we are in a deflationary utopia. The only thing that changed that is the pandemic and it won't last for long.