5 ms·

The problem is that everything is inflating except wages, which are still under extreme deflationary pressure due to outsourcing and automation. Stagnant or de

by api 12y ago

The problem is that everything is inflating except wages, which are still under extreme deflationary pressure due to outsourcing and automation. Stagnant or deflating wages means stagnant or falling consumer spending, resulting in an environment where there don't seem to be any good growth investments (no customers). As a result, you get bubbles in "safe" assets like real estate and bonds and lots of trendy speculation. I'd say both inflation and deflation are happening. We're getting inflation everywhere it's harmful, and deflation everywhere it's harmful. We are in a depression.

dnautics 12y ago
so this is a complete misuse of the concept of inflation and deflation. The correct way to phrase this is: Our inflation rate is on the upswing (so that's like a third derivative), but workers are getting screwed because their wages are under downward pressure.
opendais 12y ago
Inflation is normal: http://www.bls.gov/news.release/cpi.nr0.htm http://www.bls.gov/news.release/cpi.nr0.htm It is well in line with historic norms. Wage Growth is net positive adjusted for inflation again: http://www.nytimes.com/2014/04/05/business/economy/sign-of-spring-for-pay-real-wage-growth-in-some-places.html http://www.nytimes.com/2014/04/05/business/economy/sign-of-s... It has a nice graph if you scroll down and don't want to read. The underlying problem with trying to "fix" wages is the simple fact that with globalization you can't really push the wages for the US much higher than they are [except at the bottom where you can't really outsource the guy working in fast food for minimum wage]. It seems to be more the standard bubble event on investments due to cheap credit and poor allocation of tax burdens/govt spending. We need to do things like shift the tax burden to Capital and reduce it on the poorest of the working population. We need to fix our infrastructure issues while we can do so on cheap credit and when interest rates rise we simply cut back to "normal" (which is really just generating a different kind of debt, you can't ignore infrastructure forever).
- shaunrussell 12y ago
  > It is well in line with historic norms. The CPI (used to gauge inflation) has been modified in a variety of ways over the past 35 years. Various estimates of what the annual rate would have been over the past four years if earlier methods of calculation had been continued come up with numbers in the 5%-to-10% range. http://business.time.com/2013/03/12/if-theres-no-inflation-why-are-prices-up-so-much/ http://business.time.com/2013/03/12/if-theres-no-inflation-w...
  - opendais 12y ago
    That isn't true at all :/ http://www.bls.gov/cpi/cpiqa.htm#Question_5 http://www.bls.gov/cpi/cpiqa.htm#Question_5 Its a variance of less than 00.3% due to methodology changes. I understand its a popular myth. Please provide a source that accurately copies the methodology from the 1970s and agrees with your claim. If you are unable to do so without citing Shadowstats or another source that wants money to see their full methodology, its an invalid claim intended to milk money from people with fixed belief systems.
- canvia 12y ago
  Interesting article about inflation: http://business.time.com/2013/03/12/if-theres-no-inflation-why-are-prices-up-so-much/ http://business.time.com/2013/03/12/if-theres-no-inflation-w...
  - opendais 12y ago
    Yes, if you cherrypick items you can find item X changed faster than the total basket for CPI. CPI is intended to gauge the general rate of inflation over the economy as a whole, not that of specific purchasing patterns by individuals. As such, comparing a CPI from years ago (1999) to now (2014) is roughly equivalent. You can claim the number itself is wrong but not that is wrong compare to the values it held previously under the same methodology. [e.g. CPI can be claimed to be X% lower than reality, but if CPI is 2.7% in 1999 and 2.1% in 2014 under the same methodology the relative level of inflation is effectively identical] Even the title is wrong: "If There’s No Inflation, Why Are Prices Up So Much?" If you look at the CPI from that point in time: http://www.bls.gov/news.release/archives/cpi_03152013.htm http://www.bls.gov/news.release/archives/cpi_03152013.htm It shows 2% inflation. It is a linkbait article with a false premise and lots of cherrypicking. 1999: http://www.bls.gov/news.release/history/cpi_01142000.txt http://www.bls.gov/news.release/history/cpi_01142000.txt
eru 12y ago
Shouldn't outsourcing increase median wages globally?
- lmm 12y ago
  It probably does. Maybe wages in many places are up, and the companies that sell to those places are doing well. But the article is quite US-focussed.
  - eru 12y ago
    The discussion on HN is quite US-focussed. The article surprisingly less so.

by api 12y ago

dnautics 12y ago

so this is a complete misuse of the concept of inflation and deflation. The correct way to phrase this is: Our inflation rate is on the upswing (so that's like a third derivative), but workers are getting screwed because their wages are under downward pressure.

opendais 12y ago

Inflation is normal: http://www.bls.gov/news.release/cpi.nr0.htm http://www.bls.gov/news.release/cpi.nr0.htm It is well in line with historic norms. Wage Growth is net positive adjusted for inflation again: http://www.nytimes.com/2014/04/05/business/economy/sign-of-spring-for-pay-real-wage-growth-in-some-places.html http://www.nytimes.com/2014/04/05/business/economy/sign-of-s... It has a nice graph if you scroll down and don't want to read. The underlying problem with trying to "fix" wages is the simple fact that with globalization you can't really push the wages for the US much higher than they are [except at the bottom where you can't really outsource the guy working in fast food for minimum wage]. It seems to be more the standard bubble event on investments due to cheap credit and poor allocation of tax burdens/govt spending. We need to do things like shift the tax burden to Capital and reduce it on the poorest of the working population. We need to fix our infrastructure issues while we can do so on cheap credit and when interest rates rise we simply cut back to "normal" (which is really just generating a different kind of debt, you can't ignore infrastructure forever).

shaunrussell 12y ago
> It is well in line with historic norms. The CPI (used to gauge inflation) has been modified in a variety of ways over the past 35 years. Various estimates of what the annual rate would have been over the past four years if earlier methods of calculation had been continued come up with numbers in the 5%-to-10% range. http://business.time.com/2013/03/12/if-theres-no-inflation-why-are-prices-up-so-much/ http://business.time.com/2013/03/12/if-theres-no-inflation-w...
- opendais 12y ago
  That isn't true at all :/ http://www.bls.gov/cpi/cpiqa.htm#Question_5 http://www.bls.gov/cpi/cpiqa.htm#Question_5 Its a variance of less than 00.3% due to methodology changes. I understand its a popular myth. Please provide a source that accurately copies the methodology from the 1970s and agrees with your claim. If you are unable to do so without citing Shadowstats or another source that wants money to see their full methodology, its an invalid claim intended to milk money from people with fixed belief systems.
canvia 12y ago
Interesting article about inflation: http://business.time.com/2013/03/12/if-theres-no-inflation-why-are-prices-up-so-much/ http://business.time.com/2013/03/12/if-theres-no-inflation-w...
- opendais 12y ago
  Yes, if you cherrypick items you can find item X changed faster than the total basket for CPI. CPI is intended to gauge the general rate of inflation over the economy as a whole, not that of specific purchasing patterns by individuals. As such, comparing a CPI from years ago (1999) to now (2014) is roughly equivalent. You can claim the number itself is wrong but not that is wrong compare to the values it held previously under the same methodology. [e.g. CPI can be claimed to be X% lower than reality, but if CPI is 2.7% in 1999 and 2.1% in 2014 under the same methodology the relative level of inflation is effectively identical] Even the title is wrong: "If There’s No Inflation, Why Are Prices Up So Much?" If you look at the CPI from that point in time: http://www.bls.gov/news.release/archives/cpi_03152013.htm http://www.bls.gov/news.release/archives/cpi_03152013.htm It shows 2% inflation. It is a linkbait article with a false premise and lots of cherrypicking. 1999: http://www.bls.gov/news.release/history/cpi_01142000.txt http://www.bls.gov/news.release/history/cpi_01142000.txt

eru 12y ago

Shouldn't outsourcing increase median wages globally?

lmm 12y ago
It probably does. Maybe wages in many places are up, and the companies that sell to those places are doing well. But the article is quite US-focussed.
- eru 12y ago
  The discussion on HN is quite US-focussed. The article surprisingly less so.