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What the underpayment of the lower end of the workforce signals to me is that we have a massive amount of unrealized inflation coming in. Clearly we have to adj

What the underpayment of the lower end of the workforce signals to me is that we have a massive amount of unrealized inflation coming in. Clearly we have to adjust wages up and that’s the consequence, adding to the fact that the way official inflation/CPI numbers are calculated seems to keep them artificially low. I was just talking to someone about their father in the 70s having two cars, a 3 BR middle class house, and annual vacations as a postman. The bottom has dropped out of the buying power of American wages in the last 50 years.

jeffbee 5y ago
Right? My parents raised a family in a house they owned, with two cars, good public schools, and sent us both to college which it turned out was practically free by current standards, on the pay of a coastguardsman. People used to be able to afford life. Desperation is not normal.
imtringued 5y ago
>adding to the fact that the way official inflation/CPI numbers are calculated seems to keep them artificially low. No they are not. How do people even come up with this idea? The official CPI is 5% which is exactly where it should be. Even if you change how they are calculated it doesn't change anything except make it harder to do proper monetary policy. Keeping inflation down doesn't even make any logical sense because interest rates depend on how close you are to full employment rather than the current level of inflation. Inflation tends to be a useful indicator for full employment in normal times but we know the exact opposite is happening right now. If anything central banks want higher inflation because the zero lower bound restricts the influence of monetary policy and persistently low inflation and deflation requires unconventional monetary policy which has a huge track record of failure. Getting off the bad monetary policy requires that evil inflation that so many people fear. It's kind of funny. All that "hyperinflation" in stocks, housing and Bitcoin is actually the result of low inflation.
- user3939382 5y ago
  > How do people even come up with this idea? You obviously have an opinion on it which of course you're entitled to, but unless I'm misreading, the tone of your message is that the CPI is obviously calculated correctly and there's no controversy surrounding it. From what I have seen there definitely is, here is just one example from Forbes, but if you're interested in digging there are a lot of qualified opinions on this out there. https://www.forbes.com/sites/halahtouryalai/2013/06/24/the-major-problem-with-cpi-and-how-it-hurts-the-economy/ https://www.forbes.com/sites/halahtouryalai/2013/06/24/the-m...

jeffbee 5y ago

Right? My parents raised a family in a house they owned, with two cars, good public schools, and sent us both to college which it turned out was practically free by current standards, on the pay of a coastguardsman. People used to be able to afford life. Desperation is not normal.

imtringued 5y ago

>adding to the fact that the way official inflation/CPI numbers are calculated seems to keep them artificially low. No they are not. How do people even come up with this idea? The official CPI is 5% which is exactly where it should be. Even if you change how they are calculated it doesn't change anything except make it harder to do proper monetary policy. Keeping inflation down doesn't even make any logical sense because interest rates depend on how close you are to full employment rather than the current level of inflation. Inflation tends to be a useful indicator for full employment in normal times but we know the exact opposite is happening right now. If anything central banks want higher inflation because the zero lower bound restricts the influence of monetary policy and persistently low inflation and deflation requires unconventional monetary policy which has a huge track record of failure. Getting off the bad monetary policy requires that evil inflation that so many people fear. It's kind of funny. All that "hyperinflation" in stocks, housing and Bitcoin is actually the result of low inflation.

user3939382 5y ago
> How do people even come up with this idea? You obviously have an opinion on it which of course you're entitled to, but unless I'm misreading, the tone of your message is that the CPI is obviously calculated correctly and there's no controversy surrounding it. From what I have seen there definitely is, here is just one example from Forbes, but if you're interested in digging there are a lot of qualified opinions on this out there. https://www.forbes.com/sites/halahtouryalai/2013/06/24/the-major-problem-with-cpi-and-how-it-hurts-the-economy/ https://www.forbes.com/sites/halahtouryalai/2013/06/24/the-m...