4 ms·

Inflation has been rampant for years, it's been hidden as inflation measures inexplicably don't include cost of housing, it also doesn't include the massive sub

by olliej 5y ago

Inflation has been rampant for years, it's been hidden as inflation measures inexplicably don't include cost of housing, it also doesn't include the massive subsidies provided to industries that are poorly managed like US agriculture. Finally, the claims that massive price increases were due to inflation would be much more believable if the businesses selling the "inflation impacted goods" we're making the highest profits ever, far in excess of the highest estimates of inflation. Your claim also doesn't explain how inflation didn't balloon in countries that provided actual financial support to people - the US had two payments of next to nothing, most other countries provided continuous support, even those with far less per-capita income.

jml7c5 5y ago
>Finally, the claims that massive price increases were due to inflation You have this backwards. Inflation (via CPI) is based on price changes, it doesn't cause them. >would be much more believable if the businesses selling the "inflation impacted goods" we're making the highest profits ever, far in excess of the highest estimates of inflation. This is exactly what you'd expect when there is low supply and high demand.
- randomdata 5y ago
  Inflation is the decline in value of the currency. CPI is how we normally attempt to measure inflation since asking "How much will you pay for a dollar today?" will not yield a useful answer. You are right that the measuring is done in hindsight. But the decline in value of the currency is responsible for prices rising to compensate.
  - pmontra 5y ago
    The value of a currency can decrease compared to other currencies but prices can stay the same inside a country. What happens is that you have less of everything especially for goods that depend on trade with other countries.
    - randomdata 5y ago
      I am referring to the value of the currency compared to itself in the past. A dollar today is not worth the same amount as a dollar yesterday. Inflation is that decline in value over time. Less commonly, it is also possible for a currency to become worth more over time, which is what we refer to as deflation. If, for argument's sake, a dollar halved in value, the price of a widget of constant value would double to maintain equality in the exchange. What makes things complicated is that the value of the widget isn't constant and can also change over time, so we can't just look at that widget to see how the value of the currency is changing. Instead, we try to look for price trends across a wide range of products (CPI) to try and infer what is related to currency devaluation rather than changing values of other goods and services.
shostack 5y ago
Are there no measures that bake in home prices?
- mohanmcgeek 5y ago
  Not sure what GP is talking about. Housing is the biggest component in CPI: something like 40% IIRC
  - OrlandoHakim 5y ago
    It's an indirect measure at best and highly gameable [0] [0] https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-and-rent.pdf https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-an...
  - throwaway48375 5y ago
    There is definitely something wrong with CPI. I'm not sure what it is because on paper it seems like a reasonable measure, but anecdotally my expenses are up more like 17% vs CPI's 7%. My "personal inflation" regularly beats out CPI (although usually not by such a high margin. Housing, fuel, and food have been the biggest increases for me. I wonder if all the consumer goods are somehow over represented.
    - mohanmcgeek 5y ago
      > My "personal inflation" regularly beats out CPI I've experienced the opposite several times because I don't consume a few things that are part of the basket.
    - jjeaff 5y ago
      There is definitely something wrong with reports of gas prices being too high. I barely drive anywhere so the increase in price barely effects me.
      - notch656a 5y ago
        It's a common misconception that gas prices barely effect those who don't drive. Unfortunately it couldn't be further from the truth. A massive portion of the logistics of America, bringing essentials that almost everyone consumes like food, healthcare goods, building materials for maintaining housing, etc are reliant upon vehicles that consume petroleum products to reach the consumer.

by olliej 5y ago

jml7c5 5y ago

>Finally, the claims that massive price increases were due to inflation You have this backwards. Inflation (via CPI) is based on price changes, it doesn't cause them. >would be much more believable if the businesses selling the "inflation impacted goods" we're making the highest profits ever, far in excess of the highest estimates of inflation. This is exactly what you'd expect when there is low supply and high demand.

randomdata 5y ago
Inflation is the decline in value of the currency. CPI is how we normally attempt to measure inflation since asking "How much will you pay for a dollar today?" will not yield a useful answer. You are right that the measuring is done in hindsight. But the decline in value of the currency is responsible for prices rising to compensate.
- pmontra 5y ago
  The value of a currency can decrease compared to other currencies but prices can stay the same inside a country. What happens is that you have less of everything especially for goods that depend on trade with other countries.
  - randomdata 5y ago
    I am referring to the value of the currency compared to itself in the past. A dollar today is not worth the same amount as a dollar yesterday. Inflation is that decline in value over time. Less commonly, it is also possible for a currency to become worth more over time, which is what we refer to as deflation. If, for argument's sake, a dollar halved in value, the price of a widget of constant value would double to maintain equality in the exchange. What makes things complicated is that the value of the widget isn't constant and can also change over time, so we can't just look at that widget to see how the value of the currency is changing. Instead, we try to look for price trends across a wide range of products (CPI) to try and infer what is related to currency devaluation rather than changing values of other goods and services.

shostack 5y ago

Are there no measures that bake in home prices?

mohanmcgeek 5y ago
Not sure what GP is talking about. Housing is the biggest component in CPI: something like 40% IIRC
- OrlandoHakim 5y ago
  It's an indirect measure at best and highly gameable [0] [0] https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-and-rent.pdf https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-an...
- throwaway48375 5y ago
  There is definitely something wrong with CPI. I'm not sure what it is because on paper it seems like a reasonable measure, but anecdotally my expenses are up more like 17% vs CPI's 7%. My "personal inflation" regularly beats out CPI (although usually not by such a high margin. Housing, fuel, and food have been the biggest increases for me. I wonder if all the consumer goods are somehow over represented.
  - mohanmcgeek 5y ago
    > My "personal inflation" regularly beats out CPI I've experienced the opposite several times because I don't consume a few things that are part of the basket.
  - jjeaff 5y ago
    There is definitely something wrong with reports of gas prices being too high. I barely drive anywhere so the increase in price barely effects me.
    - notch656a 5y ago
      It's a common misconception that gas prices barely effect those who don't drive. Unfortunately it couldn't be further from the truth. A massive portion of the logistics of America, bringing essentials that almost everyone consumes like food, healthcare goods, building materials for maintaining housing, etc are reliant upon vehicles that consume petroleum products to reach the consumer.