4 ms·

We just had a 20-year period with historically high deficits and historically low inflation.

lettergram 5y ago
You sure about that low inflation? Certain assets have been growing much faster than purchasing power. And wages aren’t growing all that much. Food has stayed cheap, but also the content of boxes and bags have decreased. I’m not sure what the real inflation is, but it’s definitely not “low”.
- dragonwriter 5y ago
  > You sure about that low inflation? Yes. > Certain assets have been growing much faster than purchasing power. Assets aren't part of inflation. > And wages aren’t growing all that much. Yes, that's typical with low inflation, since inflation both pushes wages up and is pushed by wage rises. It would be weird to have low inflation without nominal wages that are stagnant.
  - jackcosgrove 5y ago
    Assets aren't part of consumer price inflation, which is the most politically sensitive because everyone buys food, etc. But asset price inflation can have negative effects on some, while it has positive effects for others. The murkier political calculus of winners vs losers makes asset price inflation less of a hot topic, but it does happen.
    - lotsofpulp 5y ago
      I am a consumer, and the government figures for inflation have no relation to my expenses. If I go back to the mid 2000s when I started working, and my pay only rose by official inflation statistics, there is no way I could afford any of the things I have now. If I take my expenses now, and go back to what they were in the mid 2000s, they grew far quicker than official inflation statistics. As far as I am concerned, VOO what I need to keep up with to tread water to afford my expected lifestyle.
      - dragonwriter 5y ago
        > I am a consumer, and the government figures for inflation have no relation to my expenses Yes, most people's individual experience is on one side of the other of the national aggregate. > If I go back to the mid 2000s when I started working, and my pay only rose by official inflation statistics, there is no way I could afford any of the things I have now Uh, duh? Its kind of normal to expect real wage increases over a 20+ year career. If your wages only rose at the rate of inflation, that would be no real wage increase. So, sure, most people could say that and its normal and what would be expected if the official inflation figures were both exactly correct and there was no deviation from the average. > If I take my expenses now, and go back to what they were in the mid 2000s, they grew far quicker than official inflation statistics. Again, that's fairly normal, even before considering whether your actual inflation experience is above or below the norm; people with rising real wages tend to adjust their lifestyle upward, not just save more.
        lotsofpulp 5y ago
        > Uh, duh? Its kind of normal to expect real wage increases over a 20+ year career. If your wages only rose at the rate of inflation, that would be no real wage increase. So, sure, most people could say that and its normal and what would be expected if the official inflation figures were both exactly correct and there was no deviation from the average. True, I worded that incorrectly. I meant that there would have been no room to accumulate enough on wages to be able to make any big purchases, like land (house), education, or healthcare. Basically, I would never expect to simply work a job such as a factory job and accomplish any goals in life. > Again, that's fairly normal, even before considering whether your actual inflation experience is above or below the norm; people with rising real wages tend to adjust their lifestyle upward, not just save more. The point is the expectation of what one can achieve with a wage that does not continue increasing at a rapid pace is much less than in decades past (in the locations I am interested in living in). It’s “up or out”.
    - imtringued 5y ago
      Sure, lower housing prices by taxing the land that it sits on. But you have to explain to me why extortion i.e. raising interest rates is supposed to be the good way of lowering housing prices. Raising interest rates might make housing cheaper because people can't afford high interest rates but it also makes everything else more expensive because interest payments are passed on to consumer prices.
    - dragonwriter 5y ago
      > Assets aren't part of consumer price inflation, which is the most politically sensitive because everyone buys food, etc. When discussing the economy, “inflation” without modification means consumer price inflation. Its not a matter of “political sensitivity”; it is just well established usage, and playing games otherwise is just equivocation. Money supply inflation and asset price inflation, are different, distinct (related in different ways) phenomena. > The murkier political calculus of winners vs losers makes asset price inflation less of a hot topic, but it does happen. “Asset price inflation” is a very hot topic, its just usually not called that and is usually viewed aa a good thing, except to the extent that there are signs that it might suddenly stop (bubble fears). Mostly, when people start talking about “asset price inflation” its an effort to tie it into fears about general (consumer price) inflation and thereby invert the normal response to “investments go up”.
- c3534l 5y ago
  > I’m not sure what the real inflation is You can, you know, look it up: https://www.minneapolisfed.org/about-us/monetary-policy/inflation-calculator/consumer-price-index-1913- https://www.minneapolisfed.org/about-us/monetary-policy/infl...
- rat87 5y ago
  > You sure about that low inflation? Certain assets have been growing much faster than purchasing power. And wages aren’t growing all that much. Yes

You sure about that low inflation? Certain assets have been growing much faster than purchasing power. And wages aren’t growing all that much. Food has stayed cheap, but also the content of boxes and bags have decreased. I’m not sure what the real inflation is, but it’s definitely not “low”.

dragonwriter 5y ago
> You sure about that low inflation? Yes. > Certain assets have been growing much faster than purchasing power. Assets aren't part of inflation. > And wages aren’t growing all that much. Yes, that's typical with low inflation, since inflation both pushes wages up and is pushed by wage rises. It would be weird to have low inflation without nominal wages that are stagnant.
- jackcosgrove 5y ago
  Assets aren't part of consumer price inflation, which is the most politically sensitive because everyone buys food, etc. But asset price inflation can have negative effects on some, while it has positive effects for others. The murkier political calculus of winners vs losers makes asset price inflation less of a hot topic, but it does happen.
  - lotsofpulp 5y ago
    I am a consumer, and the government figures for inflation have no relation to my expenses. If I go back to the mid 2000s when I started working, and my pay only rose by official inflation statistics, there is no way I could afford any of the things I have now. If I take my expenses now, and go back to what they were in the mid 2000s, they grew far quicker than official inflation statistics. As far as I am concerned, VOO what I need to keep up with to tread water to afford my expected lifestyle.
    - dragonwriter 5y ago
      > I am a consumer, and the government figures for inflation have no relation to my expenses Yes, most people's individual experience is on one side of the other of the national aggregate. > If I go back to the mid 2000s when I started working, and my pay only rose by official inflation statistics, there is no way I could afford any of the things I have now Uh, duh? Its kind of normal to expect real wage increases over a 20+ year career. If your wages only rose at the rate of inflation, that would be no real wage increase. So, sure, most people could say that and its normal and what would be expected if the official inflation figures were both exactly correct and there was no deviation from the average. > If I take my expenses now, and go back to what they were in the mid 2000s, they grew far quicker than official inflation statistics. Again, that's fairly normal, even before considering whether your actual inflation experience is above or below the norm; people with rising real wages tend to adjust their lifestyle upward, not just save more.
      - lotsofpulp 5y ago
        > Uh, duh? Its kind of normal to expect real wage increases over a 20+ year career. If your wages only rose at the rate of inflation, that would be no real wage increase. So, sure, most people could say that and its normal and what would be expected if the official inflation figures were both exactly correct and there was no deviation from the average. True, I worded that incorrectly. I meant that there would have been no room to accumulate enough on wages to be able to make any big purchases, like land (house), education, or healthcare. Basically, I would never expect to simply work a job such as a factory job and accomplish any goals in life. > Again, that's fairly normal, even before considering whether your actual inflation experience is above or below the norm; people with rising real wages tend to adjust their lifestyle upward, not just save more. The point is the expectation of what one can achieve with a wage that does not continue increasing at a rapid pace is much less than in decades past (in the locations I am interested in living in). It’s “up or out”.
  - imtringued 5y ago
    Sure, lower housing prices by taxing the land that it sits on. But you have to explain to me why extortion i.e. raising interest rates is supposed to be the good way of lowering housing prices. Raising interest rates might make housing cheaper because people can't afford high interest rates but it also makes everything else more expensive because interest payments are passed on to consumer prices.
  - dragonwriter 5y ago
    > Assets aren't part of consumer price inflation, which is the most politically sensitive because everyone buys food, etc. When discussing the economy, “inflation” without modification means consumer price inflation. Its not a matter of “political sensitivity”; it is just well established usage, and playing games otherwise is just equivocation. Money supply inflation and asset price inflation, are different, distinct (related in different ways) phenomena. > The murkier political calculus of winners vs losers makes asset price inflation less of a hot topic, but it does happen. “Asset price inflation” is a very hot topic, its just usually not called that and is usually viewed aa a good thing, except to the extent that there are signs that it might suddenly stop (bubble fears). Mostly, when people start talking about “asset price inflation” its an effort to tie it into fears about general (consumer price) inflation and thereby invert the normal response to “investments go up”.
c3534l 5y ago
> I’m not sure what the real inflation is You can, you know, look it up: https://www.minneapolisfed.org/about-us/monetary-policy/inflation-calculator/consumer-price-index-1913- https://www.minneapolisfed.org/about-us/monetary-policy/infl...
rat87 5y ago
> You sure about that low inflation? Certain assets have been growing much faster than purchasing power. And wages aren’t growing all that much. Yes