7 ms·

You're forgetting to adjust for inflation. The 1927 bubble - adjusted for inflation - took closer to the late 1990s to get a reasonable return (when you were go

You're forgetting to adjust for inflation. The 1927 bubble - adjusted for inflation - took closer to the late 1990s to get a reasonable return (when you were going into the second biggest bubble of all time). Nearly every investor would've died by then. Adjusting for inflation using shadow stats, you'd still have lost money. With the Florida land bubble - you're also forgetting property taxes.

gruez 5y ago
>Adjusting for inflation using shadow stats, you'd still have lost money. That's because shadow stats is a joke. If you adjust US GDP using their inflation figures, you'd find that the US economy has been on a continual decline for the past few decades.
- generalizations 5y ago
  That actually makes some sense.
  - gruez 5y ago
    "continual decline" is an understatement of how big the decline supposedly is. I calculated the actual decline in my other comment[1]. In short, if their figures are to be believed, the US economy contracted 67% in real terms between 2000 and 2020. That would put US GDP per capita between Guyana and Argentina. Even if you believe the "US is in decline narrative", it's hard to believe that it's been declining to the level of Guyana or Argentina. [1] https://news.ycombinator.com/item?id=31085430 https://news.ycombinator.com/item?id=31085430
    - deleted 5y ago
      [deleted]
    - generalizations 5y ago
      I don't know enough to debate the numbers, but if we're making external comparisons, my first question is whether the calculations for Argentina/Guyana have been altered to match the US shadowstat alterations.
      - gruez 5y ago
        That fixes the problem of "US declining to Argentina levels", but now you have a new problem: did the world economy contract by 67% between 2000 and 2020?
        onlyrealcuzzo 5y ago
        Why would inflation for the world match the US? Theoretically, everything can be expressed in dollars - and GDP often is - but I think you're oversimplifying things.
        gruez 5y ago
        > Why would inflation for the world match the US? It's not, but the GDP figures I was looking up was in USD, so it should be factored in. >but I think you're oversimplifying things. Perhaps, but can you think of a plausible model for why our GDP would have dropped 67% in real terms, but somehow our living standards haven't dipped to that of a developing south american/african country? The only explanations I can come up with are: 1. the real GDP drop doesn't exist, or at least is vastly overstated 2. every other country (or at least the worldwide average) GDP dropped by approximately the same amount, so comparatively speaking we're still in the same place relative to other countries
        onlyrealcuzzo 5y ago
        Living standards aren't really that low in Argentina or Chile. They're obviously much higher in the US, but we also have 10x more public debt per Capita, and 5x more private debt per Capita. That could explain a large portion of the gap...
- Gustomaximus 5y ago
  What stats support that? Doesn't look like it's in decline here: https://fred.stlouisfed.org/series/GDPC1 https://fred.stlouisfed.org/series/GDPC1 Or here: https://tradingeconomics.com/united-states/gdp-constant-prices https://tradingeconomics.com/united-states/gdp-constant-pric...
  - ivalm 5y ago
    This isn’t adjusted by the 1980s measure of inflation, that measure is no longer used and is very flawed.
  - gruez 5y ago
    Please re-read my comment. I'm not saying that GDP has actually been declining, I'm just saying that if we take nominal GDP and deflate using shadowstats' figures, the US economy would have been contracting. That's an absurd statement, which probably means the shadowstats' inflation figures are off.
    - Gustomaximus 5y ago
      Ah I see what your saying. I wasn't aware of shadowstats. Thanks for the clarification. For others: http://www.shadowstats.com/alternate_data/inflation-charts http://www.shadowstats.com/alternate_data/inflation-charts
      - astrange 5y ago
        Shadowstats is a nonsense website you don't need to link to.
        Gustomaximus 5y ago
        Is there something better that provides this type of alternate calculated information?
- jboggan 5y ago
  That would explain why so much of the country looks like it's been in continual decline for the past few decades.
- deleted 5y ago
  [deleted]
- onlyrealcuzzo 5y ago
  Here's the shadowstats chart: http://www.shadowstats.com/alternate_data/gross-domestic-product-charts http://www.shadowstats.com/alternate_data/gross-domestic-pro...
  - gruez 5y ago
    That's actually more reasonable than what you'd get if you combine their inflation figures[1] with nominal GDP[2]. Eyeballing their inflation chart (actual figures are paywalled), it looks like we've been experiencing 9% inflation since 2000. Between Q1 2000 and Q1 2020, nominal GDP per capita went up 82% (ie. 1.822x), but 9% growth for 20 year works out to be 460% growth (ie. 5.604x). In other words, the economy contracted by 67% in real terms. Maybe they realized that's too ridiculous even for conspiracy theorists, and revised their figures accordingly? [1] http://www.shadowstats.com/imgs/sgs-cpi.gif?hl=ad&t=1649771031 http://www.shadowstats.com/imgs/sgs-cpi.gif?hl=ad&t=16497710... [2] https://fred.stlouisfed.org/series/A939RC0Q052SBEA https://fred.stlouisfed.org/series/A939RC0Q052SBEA
    - onlyrealcuzzo 5y ago
      Why would you link to GDP PER CAPITA? Are you ignoring that population has grown since 2000? GDP since 2000 went from 10.5T to 24T (2.285x). Adjusted for 3% inflation, that's a 26% increase. Your point remains. 4% inflation would mean a 4% increase over 20 years. 5% inflation would mean a 14% DECREASE over 20 years. 6% inflation would mean a 29% DECREASE over 20 years. 7% inflation would mean a 41% DECREASE over 20 years. 8% inflation would mean a 51% DECREASE over 20 years. The problem is - the way people experience inflation is dramatically impacted by whether they had a 30-year fixed mortgage. If your house PRICE went up 400% since 2000 and your housing cost went DOWN 20% since 2000 - inflation would obviously seem low. If your rent went up 400% since 2000, it obviously feels different. 67% of people are homeowners - and the Fed's measure of inflation seems largely targeted to this group of people. The true rate of inflation is almost certainly higher - but probably nowhere close to ShadowStats.
      - gruez 5y ago
- janandonly 5y ago
  Hasn't it?
- usrn 5y ago
  Looking around that makes sense. Actual production shrank and almost no one can afford housing until they're middle aged. Walking down city streets the buildings that aren't boarded up and decaying only have "for lease" signs in the windows.
  - gruez 5y ago
    >Actual production shrank It did? According to https://fred.stlouisfed.org/series/USMANNQGSP https://fred.stlouisfed.org/series/USMANNQGSP, it's been steadily going up. The only thing that's shrinking is its proportion of GDP. https://fred.stlouisfed.org/series/VAPGDPMA https://fred.stlouisfed.org/series/VAPGDPMA > and almost no one can afford housing until they're middle aged ...except that shadowstat's inflation figures outstrips even housing prices[1]. Eyeballing their chart, we've been experiencing 9% growth between 2000 and 2020, translating to a 460% increase. By comparison the housing price index has only gone up 184% [1] https://fred.stlouisfed.org/series/CSUSHPISA https://fred.stlouisfed.org/series/CSUSHPISA
- PheonixPharts 5y ago
  > you'd find that the US economy has been on a continual decline for the past few decades. That claim sounds reasonable given what I've observed happening in this country over the last few decades. Without question people seem to struggle much more to obtain the same level of lifestyle as many enjoyed decades ago. You seem to claim that this is such an obvious falsehood that there's no more room for discussion, but I think there's much more room for discussion that you are implying.
  - Kranar 5y ago
    When you say that you've observed what has happened over multiple decades, are you observing people within your own social circle and are those people from a diverse and representative background or are they from a narrow demographic? It's true that the relative economic status of white men has declined over the last few decades, but the economic status of women or men from other ethnic groups has grown significantly in that time. https://www.census.gov/data/tables/time-series/demo/income-poverty/historical-income-people.html https://www.census.gov/data/tables/time-series/demo/income-p...
    - adventured 5y ago
      And even then your premise is still largely false. The median and average economic outcome of white men has increased perfectly reasonably since the late 1970s. That includes both income and net wealth figures. The American white male is economically better off than the white male in: Britain, Sweden, Germany, France, Spain, Italy, and so on. It's primarily the labor-heavy working-class white male (in the white male demographic) that has been brutalized by changes in the US and global economy. They have been left behind to drown in a pool of fentanyl.
      - AnonCoward4 5y ago
        (Disclaimer: I'm not from the US.) > It's primarily the labor-heavy working-class white male (in the white male demographic) that has been brutalized by changes in the US and global economy. They have been left behind to drown in a pool of fentanyl. That sounds like most people are actually more negatively affected by the economy compared to decades prior.
- throw8383833jj 5y ago
  the US economy has been on a continual decline for the last few decades, it's jsut been cleverely masked. that sounds quite reasonable to me, considering the vast decrease in material living standard in the US for the last several decades. there was an interview with someone who lived through the 70s that was saying a painter back then could afford to buy his own home, have a wife that didn't work and six kids! today, a single painter can barely afford to rent a single bedroom, let alone support a whole family and have a house.
  - WalterBright 5y ago
    Houses today are much larger and more expensively built than in the 70s. I don't know when this practice died out, but it used to be routine for homeowners to take in boarders.
    - BobbyJo 5y ago
      Not just that, but our lifestyles have changed entirely. How many outfits did people own? How many cars? How often did they eat out? What kind of entertainment did they enjoy, and how often? People could generally meet their basic needs because those were the only things they spent money on. Life was exceedingly bare-bones. Houses were small. Your life revolved around your job. You cooked all your own meals. You entertained yourself. The list goes on. All of that said, house prices are alone just bad example. If you went somewhere with cheap land and no red tape, you could get a 70's house at 70's prices (adjusted for inflation) still.
      - WalterBright 5y ago
        I watched "Apollo 10 1/2" recently. It's about what life in America was like in the late 1960s. One thing is that mom cooked all the meals. People rarely ate out. I know that was true in my family at the time. Eating out was a major, major treat. Entertainment was going out the door and joining up with the neighborhood kids. The house was tiny. It all was perfectly normal.
        5y ago
- dxhdr 5y ago
  > That's because shadow stats is a joke. If you adjust US GDP using their inflation figures, you'd find that the US economy has been on a continual decline for the past few decades. Today families need dual incomes just to purchase a modest home and carry health insurance. How is this not a decline in standard of living from a few decades ago? Where's our new airports? New rail transit systems? New infrastructure? Everything in this country is old and getting older.
  - bubbleRefuge 5y ago
    Inflation is and always will be relative value story. Some airports are crumbling, some are newer. Today we have iPhone's, virtual doctor's appointments and no horse manure in the street.
    - nawgz 5y ago
      And 40 years ago we had real doctors actually available for patients, no horse manure in the street, and no capitalist manure wired into our pockets 24/7 controlling our information flow thru a select set of international media conglomerates. What's your point.
      - jl6 5y ago
        I’m skeptical that the things you don’t like about 2022 are because 1982 was strictly better. Seems much more likely that we simply have a different set of compromises and priorities, with some things better and some things worse and no easy way to untangle the complex interdependencies into sweeping linear statements like “decline”.
        nawgz 5y ago
        > 1982 was strictly better > sweeping linear statements like "decline" Who are you talking to? When did I make any statements of that nature? I was pointing out the provided example was stupid. Smart phones are "cool" and all, but it'd be a tough sell to argue successfully that connectivity has increased societal cohesion, education, information dispersal, or any of the other virtues you might hope for. Instead, iPhones and virtual doctor appointments are like bandaids on a societal-wide decline, where increased privatization combines with government inflation to create a caste system they disguise as capitalism. Inflation-adjusted salaries are lower than ever across the board, housing prices are skyrocketing both absolutely and as a function of salary-years, corporate control of information has reached unprecedented levels, and the "relative value story" of now vs 40 years ago makes it pretty clear it's tougher to have a good life now even if you can have fancy toys to interact with corporate-controlled data-mined ad-laced entertainment
- NathanielLovin 5y ago
  For those who don't know about shadow stats, here's a good explanation of the issues with it, and why their numbers are off https://fullstackeconomics.com/no-the-real-inflation-rate-isnt-14-percent/ https://fullstackeconomics.com/no-the-real-inflation-rate-is... > Based on my conversations with Williams, I think I now understand what he’s doing: he’s misinterpreting a cumulative 20-year change in the measured price level as a change in the measured annual inflation rate. And that caused him to overestimate that annual change by at least an order of magnitude.
- homonculus1 5y ago
  Hmmmmmmmmm
- deleted 5y ago
  [deleted]
mech987 5y ago
I bet you're not adjusting for dividends though- I remember vaguely a chart of total inflation-adjusted return, including dividends. Forgetting dividends leads some people to be much more pessimistic than they should. If I can find the dang chart I'll post it.
- fny 5y ago
  Here's one: https://static.seekingalpha.com/uploads/2010/7/13/saupload_real_price_total_return_since_1928.png https://static.seekingalpha.com/uploads/2010/7/13/saupload_r...
  - sbelskie 5y ago
    Is total return here increase in price + dividends or are the dividends also being reinvested?
    - dsp 5y ago
      Total return reinvests, yes. https://en.wikipedia.org/wiki/Total_return https://en.wikipedia.org/wiki/Total_return
- loeg 5y ago
  They're using an absurdly wrong inflation metric ("shadow stats"), so all bets are off. Adjusting for dividends is polishing a turd.
- nope96 5y ago
  Try: https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=4&startYear=1985&symbol1=VFINX&allocation1_1=100 https://www.portfoliovisualizer.com/backtest-portfolio?s=y&t... and turn on or off "Reinvest Dividends" to compare
Anon1096 5y ago
You can't just adjust for inflation like that because there's nowhere you can put your money and get inflation-rate returns. 1 dollar in 1920 is still 1 dollar now. The closest safe rate you can get is a savings account or CD but that is much lower than inflation.
- ivalm 5y ago
  Or i-bonds or tips or the various currency swaps… it’s insane to say 1920 $ is the same now as then.
- zeroonetwothree 5y ago
  Gold is pretty good
- Msw242 5y ago
  I care about purchasing power over time. If inflation is going to mean that regardless of how I invest, tomorrow I will be able to buy less, then I would buy more today. I know there are limits, like in 1920 I couldn't buy a 1gbps internet connection or a Moderna vaccine. But despite inflation's flaws, it is useful as part of a discount rate for measuring returns.
  - Retric 5y ago
    Goods don’t rise and fall in lockstep but standard figures aren’t bad. In 1929 pig iron was 18.43$ per ton, it was $640-650 per tonne on March 7. Inflation calculator suggests it should be ~309$/ton which is fairly close across 92years but low. It also spiked to 1000+$/ton a few months later. https://www.usinflationcalculator.com/ https://www.usinflationcalculator.com/ Gasoline on the other hand was 0.21$/ gallon in 1929 plug into the inflation calculator and you get $3.53 much closer. Chicken was 42¢/lb in 1929 New York same inflation number gives $7.06/pound today which is high. What really messes things up is when goods stop representing the same thing across time. A new house in 1929 house was likely though not guaranteed to have indoor plumbing but AC was rare even though both where available back then. Of course 1929 AC was often focused on humility control not just temperature so again not apples to apples but in the other direction. Look for a comparable home base on floor space, number of bathrooms etc and housing prices are rising much slower than many charts suggest.
loeg 5y ago
> Adjusting for inflation using shadow stats, you'd still have lost money. Major red flag -- shadow stats is a hyperinflation fantasy. Of course it looks like you'd lose money if you think inflation is orders of magnitude higher than it actually was.
tonyfader 5y ago
thank you for this clarity. it is very helpful.
imtringued 5y ago
People who believe shadow stats don't know how exponential functions work. If you add 3% on top of an exponential function that new function will diverge exponentially from the original. The evidence for shadow stats should be going up every year but we haven't seen that at all.
skmrn 5y ago
The 1929 crash took just under 5 years to recover if adjusting for deflation and dividend yield (averaged 14% in that period). Nominal value took much longer but real value bounced back quick. https://www.nytimes.com/2009/04/26/your-money/stocks-and-bonds/26stra.html?_r=1&ref=business https://www.nytimes.com/2009/04/26/your-money/stocks-and-bon...

gruez 5y ago

>Adjusting for inflation using shadow stats, you'd still have lost money. That's because shadow stats is a joke. If you adjust US GDP using their inflation figures, you'd find that the US economy has been on a continual decline for the past few decades.

generalizations 5y ago
That actually makes some sense.
- gruez 5y ago
  "continual decline" is an understatement of how big the decline supposedly is. I calculated the actual decline in my other comment[1]. In short, if their figures are to be believed, the US economy contracted 67% in real terms between 2000 and 2020. That would put US GDP per capita between Guyana and Argentina. Even if you believe the "US is in decline narrative", it's hard to believe that it's been declining to the level of Guyana or Argentina. [1] https://news.ycombinator.com/item?id=31085430 https://news.ycombinator.com/item?id=31085430
  - deleted 5y ago
    [deleted]
  - generalizations 5y ago
    I don't know enough to debate the numbers, but if we're making external comparisons, my first question is whether the calculations for Argentina/Guyana have been altered to match the US shadowstat alterations.
    - gruez 5y ago
      That fixes the problem of "US declining to Argentina levels", but now you have a new problem: did the world economy contract by 67% between 2000 and 2020?
      - onlyrealcuzzo 5y ago
        Why would inflation for the world match the US? Theoretically, everything can be expressed in dollars - and GDP often is - but I think you're oversimplifying things.
        gruez 5y ago
        > Why would inflation for the world match the US? It's not, but the GDP figures I was looking up was in USD, so it should be factored in. >but I think you're oversimplifying things. Perhaps, but can you think of a plausible model for why our GDP would have dropped 67% in real terms, but somehow our living standards haven't dipped to that of a developing south american/african country? The only explanations I can come up with are: 1. the real GDP drop doesn't exist, or at least is vastly overstated 2. every other country (or at least the worldwide average) GDP dropped by approximately the same amount, so comparatively speaking we're still in the same place relative to other countries
        onlyrealcuzzo 5y ago
        Living standards aren't really that low in Argentina or Chile. They're obviously much higher in the US, but we also have 10x more public debt per Capita, and 5x more private debt per Capita. That could explain a large portion of the gap...
Gustomaximus 5y ago
What stats support that? Doesn't look like it's in decline here: https://fred.stlouisfed.org/series/GDPC1 https://fred.stlouisfed.org/series/GDPC1 Or here: https://tradingeconomics.com/united-states/gdp-constant-prices https://tradingeconomics.com/united-states/gdp-constant-pric...
- ivalm 5y ago
  This isn’t adjusted by the 1980s measure of inflation, that measure is no longer used and is very flawed.
- gruez 5y ago
  Please re-read my comment. I'm not saying that GDP has actually been declining, I'm just saying that if we take nominal GDP and deflate using shadowstats' figures, the US economy would have been contracting. That's an absurd statement, which probably means the shadowstats' inflation figures are off.
  - Gustomaximus 5y ago
    Ah I see what your saying. I wasn't aware of shadowstats. Thanks for the clarification. For others: http://www.shadowstats.com/alternate_data/inflation-charts http://www.shadowstats.com/alternate_data/inflation-charts
    - astrange 5y ago
      Shadowstats is a nonsense website you don't need to link to.
      - Gustomaximus 5y ago
        Is there something better that provides this type of alternate calculated information?
jboggan 5y ago
That would explain why so much of the country looks like it's been in continual decline for the past few decades.
deleted 5y ago
[deleted]
onlyrealcuzzo 5y ago
Here's the shadowstats chart: http://www.shadowstats.com/alternate_data/gross-domestic-product-charts http://www.shadowstats.com/alternate_data/gross-domestic-pro...
- gruez 5y ago
  That's actually more reasonable than what you'd get if you combine their inflation figures[1] with nominal GDP[2]. Eyeballing their inflation chart (actual figures are paywalled), it looks like we've been experiencing 9% inflation since 2000. Between Q1 2000 and Q1 2020, nominal GDP per capita went up 82% (ie. 1.822x), but 9% growth for 20 year works out to be 460% growth (ie. 5.604x). In other words, the economy contracted by 67% in real terms. Maybe they realized that's too ridiculous even for conspiracy theorists, and revised their figures accordingly? [1] http://www.shadowstats.com/imgs/sgs-cpi.gif?hl=ad&t=1649771031 http://www.shadowstats.com/imgs/sgs-cpi.gif?hl=ad&t=16497710... [2] https://fred.stlouisfed.org/series/A939RC0Q052SBEA https://fred.stlouisfed.org/series/A939RC0Q052SBEA
  - onlyrealcuzzo 5y ago
    Why would you link to GDP PER CAPITA? Are you ignoring that population has grown since 2000? GDP since 2000 went from 10.5T to 24T (2.285x). Adjusted for 3% inflation, that's a 26% increase. Your point remains. 4% inflation would mean a 4% increase over 20 years. 5% inflation would mean a 14% DECREASE over 20 years. 6% inflation would mean a 29% DECREASE over 20 years. 7% inflation would mean a 41% DECREASE over 20 years. 8% inflation would mean a 51% DECREASE over 20 years. The problem is - the way people experience inflation is dramatically impacted by whether they had a 30-year fixed mortgage. If your house PRICE went up 400% since 2000 and your housing cost went DOWN 20% since 2000 - inflation would obviously seem low. If your rent went up 400% since 2000, it obviously feels different. 67% of people are homeowners - and the Fed's measure of inflation seems largely targeted to this group of people. The true rate of inflation is almost certainly higher - but probably nowhere close to ShadowStats.
    - gruez 5y ago
janandonly 5y ago
Hasn't it?
usrn 5y ago
Looking around that makes sense. Actual production shrank and almost no one can afford housing until they're middle aged. Walking down city streets the buildings that aren't boarded up and decaying only have "for lease" signs in the windows.
- gruez 5y ago
  >Actual production shrank It did? According to https://fred.stlouisfed.org/series/USMANNQGSP https://fred.stlouisfed.org/series/USMANNQGSP, it's been steadily going up. The only thing that's shrinking is its proportion of GDP. https://fred.stlouisfed.org/series/VAPGDPMA https://fred.stlouisfed.org/series/VAPGDPMA > and almost no one can afford housing until they're middle aged ...except that shadowstat's inflation figures outstrips even housing prices[1]. Eyeballing their chart, we've been experiencing 9% growth between 2000 and 2020, translating to a 460% increase. By comparison the housing price index has only gone up 184% [1] https://fred.stlouisfed.org/series/CSUSHPISA https://fred.stlouisfed.org/series/CSUSHPISA
PheonixPharts 5y ago
> you'd find that the US economy has been on a continual decline for the past few decades. That claim sounds reasonable given what I've observed happening in this country over the last few decades. Without question people seem to struggle much more to obtain the same level of lifestyle as many enjoyed decades ago. You seem to claim that this is such an obvious falsehood that there's no more room for discussion, but I think there's much more room for discussion that you are implying.
- Kranar 5y ago
  When you say that you've observed what has happened over multiple decades, are you observing people within your own social circle and are those people from a diverse and representative background or are they from a narrow demographic? It's true that the relative economic status of white men has declined over the last few decades, but the economic status of women or men from other ethnic groups has grown significantly in that time. https://www.census.gov/data/tables/time-series/demo/income-poverty/historical-income-people.html https://www.census.gov/data/tables/time-series/demo/income-p...
  - adventured 5y ago
    And even then your premise is still largely false. The median and average economic outcome of white men has increased perfectly reasonably since the late 1970s. That includes both income and net wealth figures. The American white male is economically better off than the white male in: Britain, Sweden, Germany, France, Spain, Italy, and so on. It's primarily the labor-heavy working-class white male (in the white male demographic) that has been brutalized by changes in the US and global economy. They have been left behind to drown in a pool of fentanyl.
    - AnonCoward4 5y ago
      (Disclaimer: I'm not from the US.) > It's primarily the labor-heavy working-class white male (in the white male demographic) that has been brutalized by changes in the US and global economy. They have been left behind to drown in a pool of fentanyl. That sounds like most people are actually more negatively affected by the economy compared to decades prior.
throw8383833jj 5y ago
the US economy has been on a continual decline for the last few decades, it's jsut been cleverely masked. that sounds quite reasonable to me, considering the vast decrease in material living standard in the US for the last several decades. there was an interview with someone who lived through the 70s that was saying a painter back then could afford to buy his own home, have a wife that didn't work and six kids! today, a single painter can barely afford to rent a single bedroom, let alone support a whole family and have a house.
- WalterBright 5y ago
  Houses today are much larger and more expensively built than in the 70s. I don't know when this practice died out, but it used to be routine for homeowners to take in boarders.
  - BobbyJo 5y ago
    Not just that, but our lifestyles have changed entirely. How many outfits did people own? How many cars? How often did they eat out? What kind of entertainment did they enjoy, and how often? People could generally meet their basic needs because those were the only things they spent money on. Life was exceedingly bare-bones. Houses were small. Your life revolved around your job. You cooked all your own meals. You entertained yourself. The list goes on. All of that said, house prices are alone just bad example. If you went somewhere with cheap land and no red tape, you could get a 70's house at 70's prices (adjusted for inflation) still.
    - WalterBright 5y ago
      I watched "Apollo 10 1/2" recently. It's about what life in America was like in the late 1960s. One thing is that mom cooked all the meals. People rarely ate out. I know that was true in my family at the time. Eating out was a major, major treat. Entertainment was going out the door and joining up with the neighborhood kids. The house was tiny. It all was perfectly normal.
      - 5y ago
dxhdr 5y ago
> That's because shadow stats is a joke. If you adjust US GDP using their inflation figures, you'd find that the US economy has been on a continual decline for the past few decades. Today families need dual incomes just to purchase a modest home and carry health insurance. How is this not a decline in standard of living from a few decades ago? Where's our new airports? New rail transit systems? New infrastructure? Everything in this country is old and getting older.
- bubbleRefuge 5y ago
  Inflation is and always will be relative value story. Some airports are crumbling, some are newer. Today we have iPhone's, virtual doctor's appointments and no horse manure in the street.
  - nawgz 5y ago
    And 40 years ago we had real doctors actually available for patients, no horse manure in the street, and no capitalist manure wired into our pockets 24/7 controlling our information flow thru a select set of international media conglomerates. What's your point.
    - jl6 5y ago
      I’m skeptical that the things you don’t like about 2022 are because 1982 was strictly better. Seems much more likely that we simply have a different set of compromises and priorities, with some things better and some things worse and no easy way to untangle the complex interdependencies into sweeping linear statements like “decline”.
      - nawgz 5y ago
        > 1982 was strictly better > sweeping linear statements like "decline" Who are you talking to? When did I make any statements of that nature? I was pointing out the provided example was stupid. Smart phones are "cool" and all, but it'd be a tough sell to argue successfully that connectivity has increased societal cohesion, education, information dispersal, or any of the other virtues you might hope for. Instead, iPhones and virtual doctor appointments are like bandaids on a societal-wide decline, where increased privatization combines with government inflation to create a caste system they disguise as capitalism. Inflation-adjusted salaries are lower than ever across the board, housing prices are skyrocketing both absolutely and as a function of salary-years, corporate control of information has reached unprecedented levels, and the "relative value story" of now vs 40 years ago makes it pretty clear it's tougher to have a good life now even if you can have fancy toys to interact with corporate-controlled data-mined ad-laced entertainment
NathanielLovin 5y ago
For those who don't know about shadow stats, here's a good explanation of the issues with it, and why their numbers are off https://fullstackeconomics.com/no-the-real-inflation-rate-isnt-14-percent/ https://fullstackeconomics.com/no-the-real-inflation-rate-is... > Based on my conversations with Williams, I think I now understand what he’s doing: he’s misinterpreting a cumulative 20-year change in the measured price level as a change in the measured annual inflation rate. And that caused him to overestimate that annual change by at least an order of magnitude.
homonculus1 5y ago
Hmmmmmmmmm
deleted 5y ago
[deleted]

mech987 5y ago

I bet you're not adjusting for dividends though- I remember vaguely a chart of total inflation-adjusted return, including dividends. Forgetting dividends leads some people to be much more pessimistic than they should. If I can find the dang chart I'll post it.

fny 5y ago
Here's one: https://static.seekingalpha.com/uploads/2010/7/13/saupload_real_price_total_return_since_1928.png https://static.seekingalpha.com/uploads/2010/7/13/saupload_r...
- sbelskie 5y ago
  Is total return here increase in price + dividends or are the dividends also being reinvested?
  - dsp 5y ago
    Total return reinvests, yes. https://en.wikipedia.org/wiki/Total_return https://en.wikipedia.org/wiki/Total_return
loeg 5y ago
They're using an absurdly wrong inflation metric ("shadow stats"), so all bets are off. Adjusting for dividends is polishing a turd.
nope96 5y ago
Try: https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=4&startYear=1985&symbol1=VFINX&allocation1_1=100 https://www.portfoliovisualizer.com/backtest-portfolio?s=y&t... and turn on or off "Reinvest Dividends" to compare

Anon1096 5y ago

You can't just adjust for inflation like that because there's nowhere you can put your money and get inflation-rate returns. 1 dollar in 1920 is still 1 dollar now. The closest safe rate you can get is a savings account or CD but that is much lower than inflation.

ivalm 5y ago
Or i-bonds or tips or the various currency swaps… it’s insane to say 1920 $ is the same now as then.
zeroonetwothree 5y ago
Gold is pretty good
Msw242 5y ago
I care about purchasing power over time. If inflation is going to mean that regardless of how I invest, tomorrow I will be able to buy less, then I would buy more today. I know there are limits, like in 1920 I couldn't buy a 1gbps internet connection or a Moderna vaccine. But despite inflation's flaws, it is useful as part of a discount rate for measuring returns.
- Retric 5y ago
  Goods don’t rise and fall in lockstep but standard figures aren’t bad. In 1929 pig iron was 18.43$ per ton, it was $640-650 per tonne on March 7. Inflation calculator suggests it should be ~309$/ton which is fairly close across 92years but low. It also spiked to 1000+$/ton a few months later. https://www.usinflationcalculator.com/ https://www.usinflationcalculator.com/ Gasoline on the other hand was 0.21$/ gallon in 1929 plug into the inflation calculator and you get $3.53 much closer. Chicken was 42¢/lb in 1929 New York same inflation number gives $7.06/pound today which is high. What really messes things up is when goods stop representing the same thing across time. A new house in 1929 house was likely though not guaranteed to have indoor plumbing but AC was rare even though both where available back then. Of course 1929 AC was often focused on humility control not just temperature so again not apples to apples but in the other direction. Look for a comparable home base on floor space, number of bathrooms etc and housing prices are rising much slower than many charts suggest.

loeg 5y ago

> Adjusting for inflation using shadow stats, you'd still have lost money. Major red flag -- shadow stats is a hyperinflation fantasy. Of course it looks like you'd lose money if you think inflation is orders of magnitude higher than it actually was.

tonyfader 5y ago

thank you for this clarity. it is very helpful.

imtringued 5y ago

People who believe shadow stats don't know how exponential functions work. If you add 3% on top of an exponential function that new function will diverge exponentially from the original. The evidence for shadow stats should be going up every year but we haven't seen that at all.

skmrn 5y ago

The 1929 crash took just under 5 years to recover if adjusting for deflation and dividend yield (averaged 14% in that period). Nominal value took much longer but real value bounced back quick. https://www.nytimes.com/2009/04/26/your-money/stocks-and-bonds/26stra.html?_r=1&ref=business https://www.nytimes.com/2009/04/26/your-money/stocks-and-bon...