3 ms·
Real dollars aren't fictional lol, you can use the term constant-dollars if you prefer. The index is priced in 2017 dollars. Dollars each year are a new vintage
by arcticbull 3y ago
Real dollars aren't fictional lol, you can use the term constant-dollars if you prefer. The index is priced in 2017 dollars. Dollars each year are a new vintage, basically. A dollar last year is not the same as a dollar today, and comparing in real/constant dollars adjusts for that.
Inflation from 2007-2024 was 49% so... that checks out. A 2% real-dollar annualized increase would actually be more than that.
I'm not sure what your point is, those two series are equivalent.
I guess you could normalize by something else like median wage but you're going to like that even less...
- jonhohle 3y agoAbsolutely fictional. They are a tool to do comparisons disregarding inflation - that has value - but the dollar in my wallet last year is a dollar today. It can’t buy as much, but that’s what everyone who isn’t an economist considers a dollar.
- arcticbull 3y agoThey're a tool specifically for incorporating inflation. Dollars don't live in wallets for years on end. They live in markets. They live productively in bank accounts and in investment vehicles. And generally you're buying food out of your paycheck, which is also going up over time. Look at median wage. [1] They myth of the idle dollar needs to die. The question isn't how much your one dollar sitting in your wallet can buy (that's separately answered in CPI) the question is how much of your take-home pay as a percentage do you have to spend on food. That's what this series offers, in both nominal, and real dollars. The point is to compare the change in burden over time for the median individual. Comparing nominal prices isn't interesting and plays to humans poor ability to deal with exponential series. [1] https://fred.stlouisfed.org/series/LEU0252881500Q https://fred.stlouisfed.org/series/LEU0252881500Q
- MichaelZuo 3y agoPeople can quite literally keep a bill in their wallet for multiple years. Do you not believe this?
- arcticbull 3y agoWhat fraction of money do you think exists in this state?
- MichaelZuo 3y agoMore than zero…?
- arcticbull 3y agoOk, but is the amount relevant?
- MichaelZuo 3y agoI consider it relevant enough to comment about it… Whether or not any of these comments in this chain have any relevance to the economic debate I have no opinion on.