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I know that gasoline prices here in Texas have gone from $2 a gallon to $3 a gallon since 2020. However when I look at the history it was up to $3 a gallon back

by foxyv 5y ago

I know that gasoline prices here in Texas have gone from $2 a gallon to $3 a gallon since 2020. However when I look at the history it was up to $3 a gallon back in 2012 so maybe $2 was just low? Food prices are up, but not by a huge amount unless you are looking at meat. To be honest I think that overall inflation isn't a good measure. Instead I think categorized inflation measurements make more sense. Food inflation, transportation inflation, housing inflation, wage inflation etc... It seems like a dollar doesn't really have a fixed exchange value between goods like we think it does. Probably because of differences in the availability of credit. For example, the influx of point of sale credit driving bicycle sales.

tuatoru 5y ago
The Fed is guided by "core inflation" which excludes fuel and food as they are both volatile. I don't know if you can remember the commodity price "superspike" in the three years before the great financial crisis of 2008. Oil was way high, and so was wheat, and copper, and coal, and steel, ... There is an argument that they don't weight housing, health and education correctly, but the argument has to be about why that matters more now than it did before, since the Fed hasn't changed its methods. If it was underweighting housing in 2016, and it's underweighting it using the same formula now, what has changed? I won't get into the weeds of that.
- hellojesus 5y ago
  I think most would agree that the obvious changes impacting housing are: 1. Low interest rates with loose monetary policy 2. Demand increases due to covid (people want bigger, better homes if they're stuck there) 3. Lowered supply (people not moving during pandemic; new build and renovation halts) Education is rampantly increasing because the government has decided to remove all risk, essentially removing default risk from lenders so they'll loan to anyone with a pulse, regardless of expected roi. Healthcare is facing the same governmently supported interference. Edit: with regards to housing, the federal government just proved that they are willing to commender private property without just compensation which has just heavily skewed rental risk for landlords so they will now be demanding higher premiums for the same product due to unquantifiable shifts in assumed risk.
- landemva 5y ago
  The Fed is guided, err mandated, to focus on stable prices and full employment. Stable inflation of prices is 0%. 2% or 5% is not stable. Having a group of private company PhDs (the Fed is not government just a contractor to government) attempt to set the price of money at 2+% seems unlikely and not a free market. Maybe they can also set price of rice and internet service.
  - lowkey 5y ago
    I read that a 'stable' 2% inflation rate will steal 60% of the purchasing power from a wage-earner over a 40 year career.

by foxyv 5y ago

tuatoru 5y ago

The Fed is guided by "core inflation" which excludes fuel and food as they are both volatile. I don't know if you can remember the commodity price "superspike" in the three years before the great financial crisis of 2008. Oil was way high, and so was wheat, and copper, and coal, and steel, ... There is an argument that they don't weight housing, health and education correctly, but the argument has to be about why that matters more now than it did before, since the Fed hasn't changed its methods. If it was underweighting housing in 2016, and it's underweighting it using the same formula now, what has changed? I won't get into the weeds of that.

hellojesus 5y ago
I think most would agree that the obvious changes impacting housing are: 1. Low interest rates with loose monetary policy 2. Demand increases due to covid (people want bigger, better homes if they're stuck there) 3. Lowered supply (people not moving during pandemic; new build and renovation halts) Education is rampantly increasing because the government has decided to remove all risk, essentially removing default risk from lenders so they'll loan to anyone with a pulse, regardless of expected roi. Healthcare is facing the same governmently supported interference. Edit: with regards to housing, the federal government just proved that they are willing to commender private property without just compensation which has just heavily skewed rental risk for landlords so they will now be demanding higher premiums for the same product due to unquantifiable shifts in assumed risk.
landemva 5y ago
The Fed is guided, err mandated, to focus on stable prices and full employment. Stable inflation of prices is 0%. 2% or 5% is not stable. Having a group of private company PhDs (the Fed is not government just a contractor to government) attempt to set the price of money at 2+% seems unlikely and not a free market. Maybe they can also set price of rice and internet service.
- lowkey 5y ago
  I read that a 'stable' 2% inflation rate will steal 60% of the purchasing power from a wage-earner over a 40 year career.