https://fred.stlouisfed.org/graph/fredgraph.png?g=ki8y
https://fred.stlouisfed.org/graph/fredgraph.png?g=ki8A
Cost of education over real median household income, and house price index over real median household income. Education is more than twice as expensive as the start of the century, and houses are almost twice as expensive as the start of the century.
https://fred.stlouisfed.org/graph/fredgraph.png?g=ki91
There is a vast quantity of new money being created, and it isn't appearing in household incomes. Something should be done.
You could argue that, with less money supply growth, we'd have less inflation. But that works out to 3% inflation a year, which is... not much.
Because I hadn't thought about that before, but it is actually quite a concerning identity - eg, looking at the price of gold, clearly asset prices are rising in response to increases in the money supply. A kilo of gold in 2017 has nearly the same utility as in 2000, but there is a substantial price rise.
Since inflation doesn't measure things like that (only measuring changes in consumer goods EDIT - [1]) - wouldn't a substantial portion of the growth in GDP then be a response to the fact that the M2 is rising and there is trade in goods that are not included in the inflation indicies? Basically, if the central banks were forcing growth in the M2 (which they are), wouldn't that call into question the value of the real GDP as a measure of real economic growth? All it would take is that price rises in assets or business costs, caused by increases in the money supply, not be at the same percentage rate as price rises in consumer goods.
EDIT - [1] - Obviously you can get the real price of gold after adjusting for inflation, but that is assuming that the impact of inflation on the price of gold is identical to the impact of inflation on the price of consumer goods. I hadn't realised that assumption was being made before, and I'm going to read up on it to see what evidence there is that it is true, because if the impact of monetary supply increases on business and asset prices is different, then that undermines GDP growth as a meaningful measure. Thanks for the thought, it is an interesting one.
> There is a vast quantity of new money being created, and it isn't appearing in household incomes. Something should be done.
You seemed to be implying that things were out of control on the money supply. My point was that this is not so. The money supply has to grow as much as the growth of real GDP, or it's deflationary, and deflation is much more damaging than inflation. Money supply growth on top of that results in inflation, but 3% inflation isn't the kind of level that causes real problems.
I don't think that gold is a good metric. Yes, it rose in price from 2000 to 2018, but it fell from 2015-2018, and we still had growth in the money supply and inflation. The price of gold is basically a measure of distrust in fiat currencies. It reflects inflation, true, but it also incorporates sentiment, which can change much faster than the money supply.
I think that invalidates the premise of your third paragraph. (Somewhat: I don't totally buy the official inflation statistics either. But measuring by gold isn't the answer.)
I absolutely was, and still am.
> The money supply has to grow as much as the growth of real GDP, or it's deflationary, and deflation is much more damaging than inflation. Money supply growth on top of that results in inflation, but 3% inflation isn't the kind of level that causes real problems.
There is an assumption there though, and that was what I was excited about. The assumption is that everything that isn't a consumer good increases in cost by (inflation_CPI + real growth).
If that assumption is wrong, and I take my prior (ie, out of control money supply) then the result is that real GDP growth is decoupled from the growth of the underlying economy, and now I have a formula to play with.
So the next step is for me to go and look up why they think that, eg, change in the price of gold (or anything not measured as part of the CPI) is equal to (inflation_CPI + real) instead of (inflation_asset_markets + real). Because I think that the way the money supply is being expanded would cause the rate of change in expected price of assets (sans real changes in value) to differ from the inflation rate of consumer goods.
EDIT I'll just add my reasoning for why - we can establish that new money isn't going to median households by looking at the average median household wage (and growth in household numbers isn't high enough to make up the difference). Therefore, the money is likely being directed towards people who already have lots of it, and businesses. At this point, assuming that this is spent on and causes inflation first and foremost in consumer prices seems like unclear thinking. It isn't going to entities who compete for consumer goods, it is going to entities who compete for assets and business supplies.
The extra money goes to raise prices of financial assets, not just of consumer goods. Those financial assets may go up more than consumer goods do.
This is why we have https://en.wikipedia.org/wiki/Consumer_price_index vs https://en.wikipedia.org/wiki/Producer_price_index vs https://en.wikipedia.org/wiki/GDP_deflator and chained vs non-chained versions of some of these. Measuring "inflation" is hard.
https://fred.stlouisfed.org/graph/fredgraph.png?g=kipg
Another factor of two increase.
I’ll admit, income inequality has increased as well, but that by itself could be fine if the relative living cost for the average person had not increased that much
https://fivethirtyeight.com/features/fancy-dorms-arent-the-m...
"At private nonprofit colleges, the spending categories described above — student services and faculty and administrative salaries — together explain most of the tuition increase over the past two decades."
You’re just trolling now.
> three in 10 adult Americans held bachelor’s degrees in 2011. In 1947, just 5 percent of Americans 25 and older held degrees from four-year colleges. As recently as 1998, fewer than one-quarter of the adult population held college degrees.