Inflation rises to 6.8% year over year
bls.gov
bls.gov
Also a trip to the grocery store appears to cost me 50% more now for essentially the same goods. Every trip to the store pre-covid cost me around $100, now its $150. I do buy primarily proteins so that is the source of the increase but to ignore that seems ill advised.
Not generally a conspiracy theorist but unless the people that built this report are using some accepted formula that is very different than the real world this report seems to be intentionally underselling inflation.
What static US locations are "the people you know" living in?
OFC you can get cheaper rent moving to more remote and primitive housing, but that's a misrepresentation anyway.
From California, to Seattle, to the midwest, all rents have increased at least every other year. Your statement is literally unbelievable.
https://www.zumper.com/rent-research/seattle-wa
https://www.seattletimes.com/business/real-estate/in-seattle...
I know a lot of people who have recently switched apartments, and I personally negotiated it down.
For instance, if we suppose for the sake of example that the average American buys a new TV every five years, it would be true to say that the cost of TV for most Americans didn't rise this year even if TV prices increased 15%. But saying that seems to provide zero insight about CPI.
In a thread about inflation, it's highly relevant. One of the biggest benefits to a mortgage is that you lock yourself into an inflation-resistant housing cost.
- I pay all my groceries with my debit card
- Then, to get the cost for a month; I take all debit card entries in my online banking and sum them up
- I then compare the finding to older findings.
Last time I checked, the costs of my groceries hasn't gone up. So far, it has never gone up in any significant form over the last two years. Maybe by 5% but by no means +50% like the parent post suggests.
I sometimes also get anxious about "inflation" when the cashier quotes an unexpected price. And it's why I've started double checking my intuition with the above-outlined process.
Indeed, some times the shopping ends up more expensive as e.g. I bought an extra pack of coffee or meat.
And I've been consistently going to the same shop.
[0] https://www.mouseprint.org/category/downsiz/
Edit:
Humans aren't robots folks, if there's consistently some excess food being disposed of it could simply mean there's slightly less going into the wastebin.
And regarding TP, I don't know about you, but I tend to be wasteful with TP when the roll is fresh and increasingly frugal as the roll approaches empty.
This is all highly subjective but the fact is people tend to be inconsistent and wasteful.
You need to track normalized unit costs for such data to be reliable. Package sizes are constantly being manipulated, period.
This is crazy, are you on a meat only diet or do you go to very expensive restaurants? Otherwise I struggle to believe it.
That would be on the cheap side in a number of cities.
Whatever that means, but it sounds expensive.
Also: the 600€ is groceries only. I don't track the cost of going to restaurants. It'd probably significantly increase total food costs.
In my experience, "moderately expensive" restaurants (I don't actually go to what I'd term "very expensive" restaurants) come in at $40-50 per plate. That means that just for dinner, if they were going to very expensive restaurants every day they'd be paying roughly twice what they quoted.
For comparison, our household (US) spends ~$200/person/month on groceries (also with very little eating out). Food here in the US is cheaper, and we aren't mostly buying organic, but we are using Instacart. I'm also surprised they are getting such a large number.
https://www.weforum.org/agenda/2016/12/this-map-shows-how-mu...
Like OP said, they live in an expensive West European city and buy almost only organic products which consists, in part, of meat and imported products.
I myself live in a West European cit and buy almost only organic products that are plant based and mostly locals. It costs me around ~300€/month.
Still, OP pays double that. But : - The city I live in is way smaller than Berlin so it's obviously cheaper (going often in Paris for work, I can assume by how much) - I don't eat meat. Organic meat is probably (after luxury restaurant) the most expensive way to feed someone so I have no doubt that if I added meat to my diet I would be paying (a lot) more than 300€/month - 80% of my vegetables come from a local farmer with whom I have a yearly contract, which divide probably by two the vegetables cost compared to buying them in a store - Except for a few things that can't be cultivated locally (at a country scale), most of the food I buy didn't to make more than 1000km to arrive in the shop - I'll take a wild guess but while 80% of what I buy is "raw food", OP is probably buying more prepared product which again makes it more expensive - Another guess but OP is probably making their groceries in a in-town shop where prices are higher (because of rent and delivery constraints) than shops around town made for suburban people, while in my case I go in those cheaper shops to take advantage of the longer route to ride my bicycle more
All that combined, I'm not surprised by the figures given by OP since they're eating one of the most expensive diet a Western European can eat. And I'm not saying it in a bad way. I'm just trying to see facts.
Its not about withholding information. Its about aggregating the important bits together.
With a 60% rise in gasoline prices in the past year, it makes sense why you'd want to track gasoline separately from everything else.
-------
If you want to just track "everything", then quote "CPI", not "core CPI" (a different number entirely).
And I live in one of those high-priced metros, so I actually experienced a rent cut since everyone fled to Miami and Austin (thereby increasing prices there).
Obviously your experience may be different, but remember econometrics tracks the entire economy, not just your budget.
Do you believe that your way of living is representative of the average American's?
Obviously not in a California metro where the state decided to subsidize rents to compensate for preventing evictions resulting in a windfall for landlords and massive rent increases throughout the state.
What we need is tools that help individuals plug in their budget and track how inflation affects them. These overall inflation figures are pretty much useless because they have to exclude information in order to not be too highly amplified in either direction. Creating a budget of how much I typically spend on food, gas, utilities, and such and being able to backtest that budget would be really helpful, and perhaps that data could be used to crowdsource inflation figures that are more representative of what the average person is actually experiencing.
Fed releases all kinds of data (unemployment and monetary) and is pretty transparent.
It is disingenuous of you (and contributing to the erosion of institutional trust of Federal institution) by falsely accusing them.
Federal agencies aren't perfect, but at least educated people in HN should take the responsibility of giving constructive criticism based on facts rather than being brainwashed by random YouTuber/Blogger who is generally clueless about economics
I understand the sensitivity to folks spouting "fake news", but let's not discourage critical thinking in a time where there is precious little to go around.
Almost no one on HN is reflective of the 'average' American and that lack of understanding is part of the reason the poor suffer so much in policy decisioning.
It's hard, but if we want to have productive discussions we need to treat each other with empathy and talk to the best possible interpretation of each other's arguments. This assumes people are coming to a dialog in good faith, but everything needs to start with a little trust somewhere. Trolls are also not too hard to spot.
The median salary for software developers in 2019 in the US was $107,000, with 50% between $82,000 and $136,000. The mean salary in California was $134,000 and the mean in San Francisco was $145,000. (https://money.usnews.com/careers/best-jobs/software-develope...)
The median household income in the US in 2019 was $69,560 with a 90% confidence interval of <$1000. The "median earnings of all workers aged 15 and over with earnings" in 2019 was $42,065. (FWIW, the median household income for black people in 2020 was $46,000, and for Asian people was $95,000.) The median household income of those with no college education was $47,000, some college was $64,000, and at least a bachelors degree was $107,000. (https://www.census.gov/library/publications/2021/demo/p60-27...)
(The median household income in California in 2019 was $78,000.)
The median salary for software developers individually in 2019 therefore puts them in the highest 40% of households. (In 2019, 1/5th of households made less than $28,000, 2/5 made less than $54,000, 3/5 made less than $86,000, and 4/5 made less than $143,000. 95% made less than $270,000.)
For many of the people frequenting HN, this is your mileage in the act of varying.
Building an argument based on personal anecdotes and applying it to national policy not good faith. Science literally exists to limit subjective bias and to separate actual trends in reality from notions in your head, subjective experience basically worthless for understanding large-scale trends.
If you're a well-paid engineer, and nearly everyone you interact with is a well-paid engineer, you're going to think everyone lives like you.
And I wonder how many of them grew up poor. And I mean, poor as in "half my meals as a kid were rice and beans", not "One time my dad didn't get the bonus he was expecting, so we had to fly coach rather than First Class when we to France during Christmas".
If OP had made some more detailed arguments, like 'the methods for imputing homeowners rent seem biased' or 'it seems disingenuous to keep a static weighting during COVID, despite the major observed shift away from services and to goods' then I would love to engage on that.
But randomly saying 'this EXTREMELY transparent dataset seems fishy' is just encouraging people to 'do their own research' on things they have no expertise in.
There are trillions of dollars tied to these inflation numbers. Many social services are tied to these values. So if an agency could get reported inflation down just a few basis points based on their subjective decisions on what to include and what to substitute, that could save the government billions.
That's not saying that they are necessarily doing that, but its wise to be suspicious when there are such large stakes
> Public debate needs a core set of facts to reason about the world so politicizing BLS numbers is... really bad
When it becomes tied to trillions and the agencies are selected by politicians then its by definition political.
There is no perfect world where nothing can be gamed. We have a respected institution in the BLS and setting an impossible bar only promotes misinformation by discrediting what's credible.
> the agencies are selected by politicians
This is why there are specific roles for political appointees and others for career civil servants.
In this specific case, we're talking about the usual noise of someone not understanding the point of core inflation, not knowing that there are other measures of inflation, and jumping to a conclusion that the numbers must be bogus. Regardless of what you think about inflation numbers, the reasoning was bad.
Why does applying the right monetary policy depend on excluding inflation in food and energy?
Edit: answered by dragontamer
1) Increase in prices because of increase in money supply
2) Increase in prices because of supply shocks (weather, strikes, supply chain, disruption) or unusual spiky demand.
Core CPI is an attempt to measure (1) to ensure the money supply, which the fed controls is at balance (with their other mandate of full employment).
It's a hard problem because there are lot of nuances and still we want to measure the same thing for a fair MoM or YoY comparison.
This raises a question: Is economics being used as science or as after-the-fact justification, much like economic statistics were manipulated in the Soviet Union? More importantly, is anyone paying attention? Are we willing to give government agents a free hand to keep changing this all-important formula whenever it suits their political needs, simply because they think we won’t get the math?"
This was written by Edward Frenkel, a math professor at UC Berkeley who was born in the USSR in 1968 and so, we can assume, had some familiarity with statistical games played by regimes trying to hold onto power.
I invite you consider that you might extend too much faith toward federal institutions that have presided over a ceaseless rise in inequality and erosion of rights in recent decades.
https://slate.com/technology/2013/02/should-algebra-be-in-cu...
The truth is that the game is rigged. Like entropy, government power always increases over a long enough timeframe. Anytime the spotlight is shined on government they manipulate the game or blame corporations. Then they introduce regulation to "protect" citizens but these regulations add up to just keeping big business entrenched.
And he is not an economist, yet he is a well known econ crank.
Here's an actual economist [1], looking at the evidence one decade past the Boskin report - concludes the same thing.
And, the really cool thing about inflation over that length of time, is you can check it for yourself (which I have showing people why ShadowStats is complete nonsense).
Get some old ads from the start of the period (say 1996, the year of the Boskin Report), and look at prices. Put them in excel. Do the same for now. Compute a reasonable basket.
And here is the really neat part - see if the BLS reported CPI over that period matches reality, or if adding 1.1% annually matches reality.
I will spoil the result - BLS is correct.
From the CPI calculator, Jan 1996 to Jan 2021, inflation is a 1.69 multiplier, for an annual rate of 2.12%. Add back the supposed 1.1%, take the 3.22% over the same 25 years, get a 2.21 multiplier, quite a difference.
And, for the record, there are lots of other places tracing inflation, like the Billion Prices Project, that reach the same conclusions. If the govt lied about it, there would be awesome arbitrage opportunity (and like all such things, people have even investigated that - no such lies - papers on Arxiv).
[1] https://www.nber.org/system/files/working_papers/w12311/w123...
If you dig around you'll find finance papers measuring such things, demonstrating no one has found any such exploitable gaps. Plenty of groups try.
I know this is a direct quote from a Slate article, but it's a blatant lie. The commission was officially the "Advisory Commission to Study the Consumer Price Index", i.e. it's founding purpose was to evaluate the accuracy of the CPI, not an open-ended mission to save the government money.
Food...................... .4 .8 .7 .4 .9 .9 .7 6.1
Energy.................... .0 1.5 1.6 2.0 1.3 4.8 3.5 33.3The CPI index has been running continuously for decades and yet you've decided based on one uninformed HN comment that we need to scrap it and rebuild it with different measurements? Peak hubris.
I spent ten years building and maintaining one of the most important economics time-series databases in the world (tracking the US chain store sales index), if that's a credential.
I would say that criticism of the CPI isn't something I invented: https://www.investopedia.com/articles/07/consumerpriceindex....
https://www.forbes.com/sites/perianneboring/2014/02/03/if-yo...
You can search around for plenty of criticism of the CPI if you're interested. The former is reviewed by a guy with a doctorate in economics from Harvard. Is he "uninformed"?
If you believe that CPI isn't accurate and your methods more accurately represent real-world inflation conditions, there's a ton of money to be made betting on the TIPS spread.
https://www.thebalance.com/10-year-treasuries-historical-cha...
https://fred.stlouisfed.org/series/T10YIE
Right now it appears the market is actually reducing long-term expectations for inflation.
"When a measure becomes a target, it ceases to be a good measure" https://en.wikipedia.org/wiki/Goodhart%27s_law
* using "owners equivalent rent" rather than house prices: https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-an...
* factoring in technology as deflationary. yea, your phone is 20% more expensive, but it has twice the computation power, so it's actually a deflationary component
* substituting goods to account for substitution bias (https://www.frbsf.org/economic-research/publications/economi....). Substituting chicken for beef was heavily criticized.
I guess you could also make increases in health care costs go away with this approach. It’s way more expensive than 20 years ago but the tech is way better so it’s actually cheaper.
makes sense, considering that most people own their homes, aren't exposed to the housing market, and aren't buying houses every month.
>* factoring in technology as deflationary. yea, your phone is 20% more expensive, but it has twice the computation power, so it's actually a deflationary component
Why do you have to get the flagship phone? Why not get a low end phone today, that has about the same capabilities/speed as the phone you had 5 years ago?
https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-an...
Or anyone's, really.
It's not really consistent either, because hedonic adjustments are effectively "arbitrary". BUT at least they are published, so you can, if you had the time, look at all of the fudge factors they drop in and decide for yourself how much skepticism to apply.
Look at their data under "Rent of primary residence". They claim it's only 3% Nov 2020 to Nov 2021.
https://www.bls.gov/news.release/pdf/cpi.pdf
That's an obvious lie.
There’s no need for this idiocy I’m sure one of you could scrape the Zillow website in an afternoon and come up with something better.
Edit: General response to the responses. I am not advocating for Zillow to be a source of truth, I was responding to the parent comment of my post and their mention of Zillow. What I am saying is that we are not limited to using methodologies of the past, there are vast datasets and modern data collection methods available to us now that can be used.
Zillow, Redfin, etc list at prices that may be inflated, but they always list the purchased pricing as far back as they can and raise estimate to last sale if higher.
None of that relates the question of whether Zillow, on overage, correctly predicts how much the market, in the aggregate, has moved.
I think you're confusing separate issues because they both merge into a narrative of "zillow bad".
But imputed rent is a more subtle and difficult number. The goal is to know what the market rent would be for all the homes not currently on the rental market. I'm sure you can find other sources on why this value should be included in the CPI calculation (in addition to rent), but once you recognize that, it should be clearer why the Zillow approach wouldn't work: Zillow and similar sites only know about what homes sell for, or rent for.
Now could an expert come up with a model of what a home might rent for given sale price, number of sqft, bedrooms, etc.? Of course. But doing so very much isn't an afternoon project because the data is tricky: the owner occupied homes differ from rental units in important and hard to evaluate measure. For instance, apartments around my city are more poorly maintained than similarly aged ownership units.
I don't understand why this is necessary, or why asking someone who hasn't been on the housing market for 15 years what the value of their home is might be good data collection.
I bet if you asked a panel of 1000 homeowners that haven't bought or rented in 10+ years what rent was going for in their cities, they'd undershoot it by 20% or more.
> the CPI views housing units as capital (or investment) goods and not as consumption items. Spending to purchase and improve houses and other housing units is investment and not consumption. Shelter, the service the housing units provide, is the relevant consumption item for the CPI. The cost of shelter for renter-occupied housing is rent. For an owner-occupied unit, the cost of shelter is the implicit rent that owner occupants would have to pay if they were renting their homes.
If I'm reading that fact sheet correctly, they actually don't ask homeowners at all. Rather they just ask a bunch of renters whet their monthly rent is (which the vast majority of them should be able to answer accurately) and then use fancy math to extrapolate what the nearby home ownership units would rent for.
I'd suggest reading/skimming that whole fact sheet if you want more details, though the summary seems to be that they've actually put a bunch of thought into this stuff.
[0]: https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-an...
CPI's Rent of Primary Residence measures what all people pay.
Your website measures what you would have to pay if you were to rent today.
Rental contracts are sticky.
Think about it logically, per their dumb chart, inflation has averaged ~10% since 2000? and something like 7% in the 1990s? That easily gets you to over 1,000% total inflation in the past 30 years. Are you paying 10x for anything compared to the 1990s? TVs? Computers? Food? Gas? Furniture? Cars?
Also look at shrinkflation: https://www.reddit.com/r/shrinkflation/
Also look at ingredient swaps in food, like HFCS.
Also look at products that have swapped in cheaper materials.
Also look at artificially cheap labor.
https://paragonpublic.blob.core.windows.net/dash-v2-blog-ima...
Childcare's up by maybe 100%?
Tuition maybe 150%?
Not even sure what to do with equities.. they're a financial instrument not a good or service..
The "C" in CPI stands from consumer, not assets. It is a measure of the cost of goods and services that people consume. Assets are not consumed so therefore not in the CPI.
> Also look at shrinkflation
Contrary to popular opinion, the people who calculate the CPI are not complete morons. See StatCan's (who do the CPI in Canada) handbook:
> 7.10 Quantity adjustment entails accounting for changes in the quantity (e.g. package size, number of tissue ply, etc.) of observed POs. This is another implicit method of quality adjustment because it is assumed that the quality per standardized unit is the same over time.
> 7.11 Quantity adjustment is the default treatment for nearly all of the POs in the food major aggregate as well as some of the products in the household operations, and personal care supplies and equipment aggregates.
* https://www150.statcan.gc.ca/n1/pub/62-553-x/2019001/chap-7-...
* https://www150.statcan.gc.ca/n1/en/pub/62-553-x/62-553-x2019...
* https://www150.statcan.gc.ca/n1/en/catalogue/62-553-X
The boffins are aware of shrinkflation (and good substitution, which is mentioned in (IIRC) Chapter 9).
* https://www.pragcap.com/why-is-there-deflation-in-hyperinfla...
And then again in 2017:
* https://www.pragcap.com/theres-still-deflation-hyperinflatio...
And November 2021:
* https://fullstackeconomics.com/no-the-real-inflation-rate-is...
Seriously, these guys are garbage.
If you want to verify the official numbers yourself MIT has some code:
It is an incredibly flawed metric.
PCE might be the better measure.
Turns out that is not the case. Somehow a quality men's overcoat used be comperable in cost to a piece of land on the west coast that is now worth tens of millions of dollars ( and has been for decades now) When you consider where that coat came from then and what it took to get it to where it was offered vs what the practical value of that land was at that location and time... trying to compare prices of things over 50 years is like trying to compare the minutia of two different worlds you don't understand. It's impossible to cleanly bucket like for like over time when the price depends so much on "this level of thing, at this place and at this time" just as it's impossible to centrally replace the "invisible hand" in setting prices now. It's super complex to reverse engineer in hindsight why the relative prices of things were as they were at some point in the past.
Not saying that government stats don't cheat. I think they do because they have motive to do so. But I fully agree that the task of creating a useful price index over a long period of time, even a short few decades, is far from a simple problem. Anyone who doesn't agree: please go try to make one.
Another methodological difference might be mix of goods. For example, you probably can afford to pay 150/grocery-visit, but someone else might have just cut their meat intake, or switch to cheaper cuts, or have otherwise substituted such that maybe they pay $120. If you measure by the visit, or gross store receipts then the numbers will seem lower than they would comparing the same exact goods.
A 7% inflation rate is not everything going up 7%, it's a small number of things going up a lot. The human mind is a lot better at noticing things that change rather than things that don't, so inflation always seems larger than it is.
Prices of Home Depot runs fluctuated massively for certain baskets of goods in 2021, like never before.
https://www.statista.com/statistics/1239728/monthly-lumber-p...
> https://news.yahoo.com/home-depot-q-1-sales-and-profits-lift...
I will posit that you're only noticing what's not gone up.
https://pbs.twimg.com/media/FEU5b66akAASm-6?format=jpg&name=...
But I don't buy the explanation.
I think a better explanation is that the midwest and south have benefited from being in an incredibly low-friction trading bloc with a few extraordinarily productive states, while not having to compete for resources (land, goods, or services).
A variety of forces have caused that trading bloc's productivity to more uniformly distribute.
It's easy to sit in MO and say that we need "more Main Street less Wall Street". Until a hundred phd-holding 40+ year olds who've been making mid six figures and barely affording rent on 600 sqft shoeboxes for the last decade show up in on Main St and are willing to best any offer on their preferred houses. In cash. Suddenly "spreading the riches" sounds more like "oh shit I have to compete with all this wealth and education that used to be concentrated in midtown manhattan/SFBA".
Turns out that the massive rent/service disparity in the USA was unsustainable. But, instead of prices "normalizing" on the coasts, the middle won't stay cheap. Not sure there's any good solution to that, other than the midwest and south becoming more productive and better educated.
This round of Inflation is just the midwest's snow white main street realizing what gentrification means.
An asset cannot experience inflation. The word inflation suggests something that loses values. A home that gains in value is clearly not suffering inflation, rather, that is the opposite of inflation.
If you earn $200k a year, and there is 5% consumer inflation, and a year later you still make $200k, then in a sense you are 5% poorer.
If you've a house worth 200k and its value goes up 5%, then a year later you are 5% wealthier.
We might joking and informally refer to "asset inflation" but please remember, under any formal model, there is no such thing; it would be a contradiction in terms.
Not if everything else you might want and/or need to buy went up by 15%.
Of course, houses have to be maintained. At least where I am, the cost of plumbers, electricians, HVAC, etc. have exploded in the last 18 months.
Renters are a much more straightforward case. The costs of housing (i.e. the costs of purchasing and maintaining the asset) are passed on to them in the form of rent increases.
If the real value of the underlying equities/assets of the market stay the same but the nominal price goes up 2%: As a cash buyer I would absolutely say "terrible news today, the stock market suffered 2% price inflation today."
Just because the government doesn't put that into the "consumer inflation" figures doesn't mean it doesn't look like inflation to me as someone who may desire to own certain equities.
The word "real" has no meaning in this sentence unless you've first developed a concept of consumer inflation that is separate from asset values increasing. If you say that asset "inflation" should be a component of the consumer inflation that the government measures, and therefore consumer inflation includes the increase in the value of homes, then the word "real" has no meaning. You cannot say "Houses went up 5% but inflation also went up 5%" if the 5% increase in homes is already counted in the 5% inflation. You are mushing these concepts together and creating a conceptual mess.
First of all I never said that, because by definition they are two separate things.
Asset price inflation refers to a fixed quantity of currency buying less and less real assets. Consumer inflation refers to a fixed quantity of currency buying less and less of the basket of consumer goods and services.
You keep confusing yourself by sometimes mushing the concepts inflation, asset price inflation, and consumer inflation and then getting upset when one doesn't fit neatly into the other. You are mushing these concepts together and creating a conceptual mess.
You can play this disingenuous game all day where you mix the 3 concepts around, and yet at the end of the day asset price inflation will still be real.
What is a real asset? If by "real" you mean "adjusted for inflation" then, again, you are double counting the inflation. If by "real" you mean "an object with a clear category and a clear value" then I'm curious how you would derive the clear category and the clear value? If one person says "I hate that house, I would only pay $300k for it" and another person says of the same house "I love that house, I would pay $600k for it" then who is correct?
If you want to have a sane conversation about this, I would suggest that you stop using the word "real." Use "inflation adjusted" if you mean that, and then use "actual" or "countable" when you mean those things.
About this:
"You keep confusing yourself by sometimes mushing the concepts inflation, asset price inflation, and consumer inflation and then getting upset when one doesn't fit neatly into the other."
I am not upset with you, nor did I say anything to suggest that I was upset with you. I'm simply pointing out that you don't seem to understand the words that you are using.
Also, I've avoided bringing politics into this, but it might be worth thinking of some of the notorious incidents of hyper-inflation, the political effects it had, and how such effects are simply not rational or possible or connected to increasing nominal prices for assets. I wrote about the late Soviet era hyper-inflation here:
https://demodexio.substack.com/p/the-struggle-to-save-the-so...
> If by "real" you mean "adjusted for inflation" then, again, you are double counting the inflation. If by "real" you mean "an object with a clear category and a clear value" then I'm curious how you would derive the clear category and the clear value?
I don't precisely mean either in regards to "real assets", see below.
>What is a real asset?
"Real assets are physical or tangible assets, such as infrastructure, real estate, natural resources and precious metals, whose value is based on their physical properties or utility." [0][1][2]
If I said "actual" or "countable" assets it would most definitely not have the same meaning. IOUs friend bill or a dollar bill are both actual and countable assets but not real assets.
>I would suggest that you stop using the word "real."
OK but to do so I'm going to need to see lkrubner's personal dictionary, since we are dispensing with the terms used in the financial industry.
>I hate that house, I would only pay $300k for it" and another person says of the same house "I love that house, I would pay $600k for it" then who is correct?
You can argue who is correct but when a house is for sale the title is generally transferred to the highest bidder, all else equal. It really doesn't mean dick if I walk up to a house for sale and tell the owner I think it's worth $1000 bucks, nor does it mean anything if I think it's worth $1M and never pony up the money. When on a macro level we see the executed transaction for similar houses trend towards a price, it's safe to say the market roughly values houses similar to that house near that price.
>If by "real" you mean "adjusted for inflation" then, again, you are double counting the inflation.
Today I own one drill press as a capital for my manufacturing business. Tomorrow the .gov prints 1 quadrillion dollars. Tomorrow drill presses aren't any harder to come by nor harder to make nor any more or less useful for industry or for me or anyone else. The price inflation still rises. You can single, double, or triple or even fractionally count your idea of inflation in whatever made-up definition soup you want to conjure up, but the price inflation from more magic dollars entering circulation will still be there.
>https://demodexio.substack.com/p/the-struggle-to-save-the-so...
Interesting read. My take based on your writing is we should remove the money supply from the government, and instead decentralize as best we can to minimize the bad acts of a few actors. Widespread adoption of commodity money and privately issued notes (both fiat and asset backed) are a couple ways to reduce the influence of a single powerful government from having full control of the money supply.
[0] https://en.wikipedia.org/wiki/Real_assets
[1] https://www.dws.com/en-us/strategies/asset-classes/real-asse...
[2] https://www.investopedia.com/terms/r/realasset.asp#:~:text=R....
Future tense is compatible with a correct model, but present tense would be incorrect. No inflation has occurred even if the price goes from $100 to $100,000 for the exact same item. Again, as I've said several times elsewhere in this thread, when we are speaking jokingly or informally it is perfectly okay to say "asset price inflation" and everyone will informally understand what you mean. But I've been trying to explain how the government calculates inflation.
If the price goes from $100 to $100,000 for the exact same capital good that you own, you've become wealthier in nominal terms. However, you will need to pass along this price increase to those further down the line, either another company or a final consumer of some product of which your product might be a part. Once the final consumer sees the price increase, then the government will declare it to be inflation. But the government does not regard it as inflation in the CPI till it reaches the final consumer.
It might be a technical point, but it is worth keeping in mind: even those events that guarantee consumer inflation are not consumer inflation until they reach the final consumer. The distance in time might be weeks or years. Sometimes an event occurs and consumers feel the effect within a day -- gasoline prices are often like this, a terrorist attack in Saudi Arabia can see an uptick in prices within a day or two. Other times some event occurs and it takes years before consumers see the increase in prices; over fishing of the oceans is an event that almost guarantees consumer inflation, but typically takes several years to settle in, as the effect among the fish is multi-generational.
I think this really drills down into the crux of the problem that was posed. If you merely want to survive and not build up investments and capital for your later life and heirs, then consumer inflation gives you a good picture of how prices are raising around you and what your purchasing power looks like.
If you actually care about having some security for the future, land or assets for your business, preserving wealth for general use in any asset class, or something to pass on for your family, or being a PART of the world rather than just a consumer, then the CPI looks like a poor indicator of your changes in purchasing power.
The problem is these numbers get reported in headlines as “inflation”.
People are experiencing greater than 6% inflation in their pocketbooks. So I suppose I’m objecting to something different from what you’re talking about.
That doesn't follow. A nominal rise of 5% doesn't make you 5% wealthier. Asset PRICE inflation is a real thing. You're conflating value appreciation and depreciation (rise or fall in real value) with price inflation/deflation (rise or fall of nominal value).
This sentence is unmanageable:
"You're conflating appreciation and depreciation (rise or fall in real value) with inflation/deflation (rise or fall of nominal value)."
First of all, I'm explaining the government's definition of consumer inflation, which you seem to misunderstand. The government does not formally model rising asset prices as consumer inflation, the government models that increasing wealth.
Second of all, you're conflating nominal appreciation and nominal depreciation with the concept of the "real," which is to say, inflation adjusted value. If the value of your house increases by 5% then you are 5% wealthier. Whether this has kept up with the pace of inflation is a separate issue. We need to talk cleanly and cogently about nominal value versus real changes in value. You can do that by adjusting your changing value of wealth by the consumer inflation, but clearly you cannot do that mental adjustment if you're trying to base the calculation off the real value of your assets -- in that case you would be double counting the inflation.
To put that differently:
Suppose your house increases a nominal 5% and consumer inflation is 6%. You might say "Oh, I'm 1% poorer in real terms." But you can't say that if, as you seem to want, asset values are included in the calculation of consumer inflation. In other words, if the 5% increase is already part of the 6% increase, then you've mushed the concepts together to such an extent that the calculation becomes meaningless.
You've mushed them together, not I. We were talking about asset price inflation, and then you tried to mush it together with consumer inflation.
Most people buy a house with a down payment. A conventional down payment is 20%. If you bought a house for $100,000 (with $20k down) and it's now worth $105,000. You can now sell the house, and put $25k down on another house, which means you can now qualify for a $125,000 house. For simplicity I'm ignoring principal that had been paid down on the first mortgage and transactional costs.
The phrase "asset inflation" is one that we can use jokingly and informally, but formally it would not make any sense in any real attempt to judge changes in the standard of living.
By contrast, these are all valid questions:
Are wages going up faster than the nominal price of homes?
Is labor productivity going up faster than the nominal price of homes?
Is the share of national income going to labor increasing or decreasing?
Is asset wealth increasingly held in liquid or illiquid forms?
Is average rent going up faster than average wages?
If inflation is also 5%, your profit is 0%.
Define "housing". When it comes to shelter, that is taken into account.
> Anyone with a web browser knows that home prices have experienced a monumental increase.
Because the "C" in CPI stands for consumer. Home prices reflect asset prices. They are not counted in the CPI just like stock and bond prices are not counted: these are all asset classes.
> House prices are an interesting case. Houses are considered capital investment by the [US] BLS. So, when the value of your home increases that's a good thing as you didn't consume the house. In other words, you don't need to replace the house. Consumption goods are different in that you need to replace the thing you bought. Inflation is very bad for consumption goods because it costs you more to replace that thing each time you need it (food, for instance).
* https://www.pragcap.com/forum/topic/assflation/#postid-2165
> The BLS views housing as a mostly “investment” item as opposed to a consumption item. So, for instance, when you consume a hot dog and have to replace it then the cost of replacement is a direct reflection on your well-being. A $1 hot dog that costs $2 one year later is a material change in living standards, all else equal, since the hot dog is an asset that you literally consume. A house is much more complex. [...] > > Of course, anyone who owns a house knows that it’s not that simple. You do basically consume your house over time. For instance, my home has appreciated substantially since I purchased it just 5 years ago and underwent a hellish remodel. At that time the cost of replacement was roughly $300 per square foot. But in the ensuing years the cost of replacement has increased to $400 per square foot. As my physical home falls apart over the years I will need to replace it. But the key point is that, as I replace these components the housing market is likely to revalue the total home value to account for this investment. So even though I am consuming my house over time I am very likely to recoup those costs.
* https://www.pragcap.com/should-house-prices-be-in-the-cpi/
* https://awealthofcommonsense.com/2021/03/what-if-housing-pri...
But the largest component of any "house" is actually the land, which is an asset and thus not in the CPI.
Shelter is consumption, housing is an asset.
> It doesn't produce anything.
Housing produces shelter over time.
No, it doesn't.
Agricultural real estate does, and it is an asset.
We say that machine is an asset.
The machine is eventually "used up" over its lifetime, but that doesn't make it "consumable" in the sense used here - that's true of many assets (we call it "depreciation").
I think "house as button machine" is a consistent model that matches dragonwriter's usage.
No, it's not. Food isn't a durable good that provides “nourishment” for consumption on an ongoing basis; agricultural real estate is, in exactly the same way as residential real estate is for shelter.
They have come down somewhat from their peak earlier in the year (though still significantly more than they were a year ago). In May they were over $16/bushel.
Lentils have just about doubled in price. $18.20/hundredweight in December '20, $36.20/hundredweight today.
With coupon of course.
After that who can say?
Back in July, Siegel pointed out that the M2 money supply is 30% over pre-pandemic levels and predicted that would translate into 20% cumulative inflation over the next 3 years. Here are my talk notes / video links if you're interested: https://neapowers.com/investing/jeremy-siegel/
In July Siegel said "There is zero need for the Fed to be buying $120 billion in bonds every month given market conditions." I don't know why the Fed is buying mortgage backed securities in the midst of an apparent housing bubble.
Larry Summers was voicing inflation concerns back in March: https://www.youtube.com/watch?v=PBnaahSe7JU&ab_channel=Bloom...
The main macroeconomists I follow (Siegel, Gundlach, Summers) are all puzzled by the Feds actions recently.
Another possibility is that someone realized something really awful, like that the global economy had shifted such that anything like the "asian contagion" crash (no, nothing to do with COVID[0]) can't be contained next time, so they're desperately trying to keep the plates spinning until they can figure something out, because they expect the next major crash will be a true global depression and don't know how to stop/mitigate it if it's triggered.
[0] https://en.wikipedia.org/wiki/1997_Asian_financial_crisis
Though, given the rate of inflation, the housing market may not pop as land is a secure asset that the wealthy are getting into.
The first people getting those borrowed dollars (government contractors, banks selling treasuries and MBS, old people on social security) will be okay.
Can you expand on this? How does that work?
This means that they can turn on the presses (or these days, make some keystrokes) and instantly have as much money as they want. Because of this, if there are outstanding debts that are denominated in USD, the government will always be able to have that money on hand, or create it.
The problem is that this puts more dollars out in the world. And if there are more dollars in circulation, everyone (on average) has a little bit more they can "bid" on consumer goods. Because of the law of supply and demand, things inflate in price.
Big opportunities in manufacturing and agriculture, risks in finance and communications.
In NYC, many restaurants and property owners survived thanks to debt which will eat into their profits for years to come and may even bankrupt them down the road.
What is the answer to overwhelming debt? Inflation. Inflation makes the principle that you owe a lot cheaper and if you have borrowed in fixed interest rates, it makes the interest payments cheaper as well.
It would help both the government and the businesses mostly affected by Covid to run high inflation for a few years. This may or may not be part of the Fed calculation but I don't understand why nobody talks about it.
But it can also benefit owners of physical assets, borrowers of dollars, and exporters of domestic goods.
Inflation taxes money, but not hard assets.
The poor have their week's worth of money that then gets taxed an extra 10-30%. The middle-class may sell some assets and be partly hit as a result. The wealthy will just hold their assets until the market settles down and lose nothing.
This is the exact opposite of a good economic solution.
The system is built by and FOR the wealthy. The system is working exactly as designed: to hold down the middle and lower classes, giving them just enough to be happy but not enough to emerge from the rat race.
Would you be happy consuming just $30K/year? I didn't think so.
The ratrace is not a matter of absolute numbers, it's because everyone wants to have more than their neighbors have and more than what their parents had. Also, everyone seems to want to spend 20% more than what they are making hence most people in the country are in (consumer) debt. Government is no exception and mirrors the behavior of the citizen.
This whole thing about the rich not giving enough money to the poor to keep them working is BS.
As long as wages increase with, and they have to. If the poor can no longer as a whole afford to pay $1k in rent because the money goes on food, then they won't, and rental prices will have to come down because the demand for rental at $1k crashes (as nobody can afford it)
The government is screwed if interest rates are high. They roll over their debt on an ongoing basis, and if interest rates go to even just ~5 percent then a huge chunk of the annual tax revenue will go to just repaying interest on the debt. The government (read: the people) cannot afford to have that happen unless drastic spending cuts accompany it. Recent events show that most legislators are interested in ramping up spending, not ramping down, which basically means that inflation would have serious consequences for the budget and economy.
Best option would be to have a diverse portfolio of energy production: oil, natural gas, solar, wind, hydroelectric, and nuclear. Don't go all in on one, that's how you arrive at the situation we are currently in.
Great! Puts us one step closer to slowing global warming and giving us a chance to turn this boat around.
Rising oil prices makes the market naturally move away, which is really really good in the long run.
> Rising oil prices makes the market naturally move away
This is trivialization of the transition as the worlds depends oil in many ways: development of cars (electric or otherwise), airplanes, solar panels, vaccines, acetaminophen, etc. -- these are all petroleum-derived products.
I recommend this article on the difficulty of the transition https://www.theatlantic.com/international/archive/2021/11/en...
Given this dependence, axing our production just means we have to rely more on other countries and given that climate change is a global problem -- what's the difference? If we do it here, perhaps we innovate on making its extraction more eco friendly (which has been the case for the last 20 years)
I see your compassion, but income inequality isn't driven by prices, it's driven by the employers not paying enough to their employees. Prices can't fix that.
> This is trivialization of the transition
Is it? I read it more as this being an important step toward addressing the climate crisis.
> as the worlds depends oil in many ways
How much oil is used in making acetaminophen? Why even bring it up? Nobody is saying "no oil," they're saying "stop polluting so much".
> perhaps we innovate on making its extraction more eco friendly
The extraction is a small problem. The global warming it causes is the large problem. Less pumped oil means less burned oil which means fewer greenhouse gases.
The two are intertwined. Every big-ticket item costs at least $1000 round numbers these days. If you halved that threshold to $500, you would put more valuable goods in reach to more people without adjusting wages.
You can do the same by increasing wages, but that threshold might go up in response to $2000.
It’s all about prices relative to wages, not either in isolation
Figure out how to make products cost less and cheaper -> more can enjoy them and everyone becomes richer.
Print more money to give to people to fight inequality? If you don't invest to make supply more efficient, all you'll get is inflation.
Rich people don't buy the same products as poor people. In fact, most rich people (Elon) own capital that is being invested in part to make production more efficient.
If you were to tax all of Elon's wealth and give it to the poor, it's just not the case that everyone could suddenly afford a Tesla. What would happen is that nobody could afford it, even people that can afford it today, because you are moving capital away from investment and into consumption.
Recent narratives is that you can do welfare for 'free', either by printing money and not worry about inflation or default, or by taxing 'billionaires' so nobody feels it except 100 people.
Not exactly, it's also driven by price increases. If employers give their employees a 50% pay increase, but prices increase by 50% then that pay raise is rolled back by inflation. Wealthier people more often have their money in assets, with values that increase alongside inflation. This is largely the dynamic we're seeing in the US: labor shortage means people get paid more, but those increased wages are getting eaten by higher prices.
Also the sources I see show nominal wages growing faster than inflation for low income households, meaning that their real wages are actually increasing.
> perhaps we innovate on making its extraction more eco friendly
Wait what? Fossil fuels will never be eco friendly. The best thing for renewable energy is to be more economical than their competitors, which is far more achievable when oil is expensive. It should be obvious that oil prices doubling do not cause electric cars or solar panels to double in price, even if they do become slightly more expensive.
Not saying that's all rainbows either but you're suggesting there can't possibly be any improvement here. Sounds like a bad bet.
That's the point isn't it? From an environmentalist perspective, policy that discourages fossil fuel production makes renewables more economically attractive by comparison, encouraging attrition away from fossil fuels into renewables, thus reducing emissions.
> Best option would be to have a diverse portfolio of energy production: oil, natural gas, solar, wind, hydroelectric, and nuclear.
Pretty much everyone can agree with this statement, the devil is in the details as usual.
> However, thus far the price surge is primarily a result of 3 million barrels per day (BPD) of oil production that was lost in the spring of 2020 that hasn’t fully recovered. Demand has fully recovered, so that is the fundamental reason for the surge in prices. Further, that surge began in the fall of 2020 — five months before President Trump left office.
All the Democrat candidates put themselves forward as anti-oil. If you thought Trump would lose, it would be smart to buy oil and then hold for a while.
When Biden won, the speculation took off. Signals matter.
Biden signaled that everyone must move away from gas-driven vehicles. He banned a pipeline (getting sued by Canada over that one). He banned as much fracking as he could. Even worse, he defied congress and the law by allowing the Russians to build their pipeline which will pipe money straight into Putin's pocket
The result of these changes (and others) was a lot of people shutting down oil production. Others speculated even more that the pipeline and fracking decrease would mean less supply, so they bought up the oil while the prices were still down.
With OPEC refusing to up production, there's even less reason for the speculators to sell. Biden released part of the strategic reserve, but it amounted to less than two days supply of oil for the country and nobody who knew anything about the oil market cared very much.
US actually needs higher crude prices to make sure the incentives exist for shale production to get back to pre covid levels.
The supply chain sluggishness (worldwide) combined with excessive, irresponsible spending (although I hear it "costs nothing"...) explain these figures.
Euro area has higher inflation than pre covid but nowhere near these levels.
It's not transitory, and it's not good.
When it comes to protecting your assets from inflation, I suppose investing in companies that pay good dividends and are able to cover the inflation in their business model should be a relatively safe bet, as they continue to provide a steady cashflow. If you think the inflation is here to stay and you want to take on more risk, you could take out a loan and leverage that by investing it, as the inflation should cover the interest.
Note that this is NOT financial advice -- I'm anyway not qualified to give that, so take this only as food for thought.
https://www.metaculus.com/questions/7977/inflation-above-3-i...
I am leaning more heavily on physical assets as even foreign stocks will suffer to some extent in the event of a dollar crisis. With USD as the current global reserve it's failure will ripple through financial markets and economies around the world.
The best thing you can do is learn how these kinds of things have played out in the past and make a plan to "weather the storm" as it were. I have really been enjoying stories of living through high inflation in other countries on https://www.youtube.com/c/StarPathAcademy. Not saying that is where we are certainly headed but all of the indicators are the same as other high/hyper-inflation periods in history.
All this hysteria over moderate inflation is being stoked by those that have been rent seekers sitting on their wealth, enjoying that the value of their lent money barely decreases.
edit: We've had higher inflation just for a few months and to those saying that its now clear it isn't transitory, 'Transitory' for an economy is a year, at the minimum, not several months.
I'd take higher consumer prices while supply comes back online 10 times out of 10 over a prolonged economic downturn.
Nonsense. The wealthy have a diversified portfolio of assets, not just money in a bank account. Most of these assets are at least hedged against inflation, if not appreciating over time. The lower and middle classes then take debt to buy some of these assets from the rich.
I call bunk. The majority of the money in the record breaking spending bills of the past 18 months hasn't been spent yet.
Inflation doesn't really affect the wealthy, though. The people at the bottom are the ones who don't have 7% margin in their budget. Blaming this on the hysteria of rich people is to overlook the plight of the margin.
Meanwhile their rent and basic cost of living increases and wages don’t always increase to compensate. As property and wealth building assets appreciate, the lower class has an even larger barrier to financial independence.
The goal here for congress and the fed seems to be propping up the insanely overheated markets rather than assisting the poor. Kicking the can down the road isn’t a good long term strategy and we’ve been running on empty since ‘08.
This reminds me on an interesting take on international politics I read last week. Shale has enabled far greater energy independence for the US. Energy independence has partly led to a de-prioritization of the Middle East, which made withdrawing from Afghanistan/Iraq more probable.
If prices increase 5-6% per year without similar wage increases demand drops naturally and prices fall.
5-6% increase in price could just mean less is produced, or the US commands weaker exchange on the world market. In that case it would be real inflation as appears to the consumer.
Your entire lifestyle is dependent on oil. It powers global supply chains and critical societal infrastructure which is simply not optional.
Renewables and batteries are great, but they come with their own set of problems which haven’t been solved yet. For example, electrical grids currently do not have the capacity to run completely on renewables as renewables cannot generate scalable energy locally. Overhauling our power grids is a massive undertaking, and we’re going to need to use a ton of oil products to make that happen.
Attempting to reduce the worlds dependence on oil via market manipulation is not the correct or effective path towards sustainability.
Also, investors won't start exiting the market if they expect expansion in housing stock. Financial markets trend, they absorb information imperfectly, they overreact, and there is massive volatility as all this occurs. Indeed, there are some investors who base their investment strategy on the inability of markets to react to capital cycles (Marathon Asset Management have written books about this). Investors have different time scales, if the housing stock was going to expand then you would see capital pile into the sectors because people will chase that growth expecting to flip at a higher price at the top.
When you own a home, whether you've paid it off or have a mortgage, you can sell that home and convert it back into currency that you can use for other things. Even better if you can improve upon the home in ways that increase the resale value. Depending on the state of the housing market, it gives the potential to hedge inflation. Homes can be inherited and passed on to descendants. Perhaps one could hold their wealth in precious metals as an alternative, but those metals don't provide value until they are cashed out. A home, on the other hand, provides constant value because you get to live in it and do with it as you please (HOAs and other regulatory bodies notwithstanding).
When you rent a home, you are paying to pretend like you own the place. You cannot sell the home, any improvements you make to it benefits the landlord, and you cannot put your home in a will. In other words, when you hand in your rent check every month, that wealth might as well have disappeared into the ether.
It's hard to speak for other parts of the world, but my experience in California is that the concept of a "starter home" is a thing of the past. Yes, there are swaths of small homes that may become available, but one that isn't horribly dated can be hard or in disrepair to come by, and these days the price of an existing starter home is pretty outrageous. Whenever you see new construction, typically it's one of 4 things: mansions, McMansions, condos, and large-scale apartment complexes. My assumption is the reason you don't see new starter homes being built is because the only way for developers to make a meaningful profit after years of fighting for municipal approvals is to build one of those 4 types of homes I mentioned because they have the highest return upon sale.
Seriously, just take a tour of the Southern California area. You are unlikely to find new single family homes being built that aren't McMansions. Nearly all of the starter homes that would be appropriate for a young couple and a couple of small kids are occupied by retirees, are in need of renovation, and are in less favorable areas.
Maybe it's different around the rest of the country and the world, but with the way the housing market and the economy are going, as well as the direction that UN governments want to take things, I predict that will be a spreading and continuing trend.
If it wasn't so costly, time consuming, and an overall hassle to build homes of various sizes, more people might be able to maintain and build wealth even in the face of inflation. Otherwise, their currency mostly sits and rots, or gets lost in bad stock market gambles.
Hell, just try building a "tiny house" and see how that goes. Many of the people that build those have to build them on wheels for a reason, and not necessarily because they want a quirky portable home.
EDIT: Oh, and about the labor force thing... if people have the hope of being to able to own a home and build their own little fiefdom like their parents and grandparents did, they might choose to participate as opposed to being part of the mass workforce exodus we've seen recently. After all, if you have no hope of owning a home and you probably won't retire, why spend your life working hard rather than just working minimally to get by? Even I would work way harder if I didn't think that home ownership would be futile or at most a Pyrrhic victory.
Gasoline is like 5% per month. This is almost entirely an energy problem
Gasoline up over 50% over the year, increasing delivery costs and the price of damn near everything else.
The short term temporary solution is pressure on OPEC+ and jump-starting Shale (no small task).
The long term permanent solution is EVs and massive investment in renewable base load power generation.
Better to lean hard into electric mobility; in the short term, mandate employers allow remote work if the role supports such a config. This prioritizes oil for uses where it must be used (moving atoms versus bits), and is the only practical short term action that would be effective for managing the oil demand run rate.
We had the 70s oil embargo, we've had numerous oil price spikes since then that cause outsized diversion of productivity to acquiring energy for consumption [2], it's time to get off of oil. No more bandaids.
[1] https://en.wikipedia.org/wiki/Phase-out_of_fossil_fuel_vehic...
[2] https://www.macrotrends.net/1369/crude-oil-price-history-cha...
EVs do have a higher upfront cost, but lower total cost of ownership. Issue green bonds to subsidize the capital cost for borrowers, and increase the tax on internal combustion vehicles sales. EV supply is currently manufacturing constrained; provide incentives to rapidly scale EV and battery manufacturing.
[1] https://www.energy.gov/eere/vehicles/articles/fotw-1190-june...
For now. Because they are new. But there's every reason to believe this is temporary. Electric cars are way simpler to manufacture. Far fewer moving parts. Literally.
By 2024 every major car manufacturer will have a solid lineup of EVs and mega manufacturing capacity. EV Corollas will be the normal lowest-end car purchase by 2030, and with a tiny fraction of the operating costs.
With the price of cars going nuts, that could be good for EVs.
The price of used cars is going nuts far more than new cars, so I don't think the increase in car prices is good news for sellers of a class of new cars that is already at a premium.
Dealerships and car sales people have always been scum - but an economy like this turbocharges their virility.
I'll call BS on this. Sounds completely made up.
These popular all around great cars are getting inflated to hell
Covid was a part, but Biden put OPEC back in the driver's seat.
An article from December 2020 [1] illustrates the massive dropoff in specifically shale oil production from peak 2019.
And I'd direct you to an interactive chart that shows that in Jan 2021 (the end of Trump's term), we consumed more than we produced. But that is frankly misleading, since as you can see for yourself [2], we have been at or near energy parity for some years, and we remain so, under Biden. It is true, and to Trump's credit, that during his term, we for the first time in the 21st century became net exporters of energy products. However, that remains true today under Biden (as of Aug 2021, the latest data series).
I remain skeptical of the idea that Biden has caused overall price spikes, as opposed to world demand recovering faster than world production and delivery channels.
[0] https://wolfstreet.com/2021/08/03/us-shale-oil-drillers-batt...
[1] https://www.investing.com/analysis/the-collapse-of-us-shale-...
[2] https://www.spglobal.com/marketintelligence/en/news-insights...
19.2% according to Zillow. Sure there will be differences between metrics, but housing is clearly more than 0.5%.
We desperately need to dramatically curtail municipal planning authority and crank up construction.
> Shelter, the service the housing units provide, is the relevant consumption item for the CPI. The cost of shelter for renter- occupied housing is rent. For an owner-occupied unit, the cost of shelter is the implicit rent that owner occupants would have to pay if they were renting their homes.
https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-an...
That said, the difference in rents and home values is disconcerting.
Shelter isn't even 3rd place.
New vehicles are closer to 11%.
The consumer price index has all sorts of stuff built into it, like the price of televisions, which holds the number down. Sure, television prices have dropped substantially, but I’ve spent under $300 on televisions in the last decade so it doesn’t even begin to factor into what my money is worth.
Houses are the opposite, it’s such a huge expense that practically everything else is inconsequential in comparison.
That's 23% of $480,000, which is a hell of a lot more than 50% of $4 for gas or 30% of a $40,000 car. Percentages mean nothing, really.
Ah right, you made money and/or equity actually. That didn't really affect your price of housing. Your 30Y mortgage was locked in years ago, so you only benefit when prices go up.
Unless you stay in the house until you die, in which case property taxes mean you lose bigtime by appreciating values.
For a house staying in the family I'd want it to be worth as little as possible.
Also it would greatly reduce air pollution that is directly harmful to humans, since the majority of that comes from tire and brake dust. And for areas near water, greatly reduce microplastics, as tires are the greatest source of that. And on the pacific, it would allow salmon populations to increase, as a tire softener has been found to degrade into a potent neurotoxin in water that is severely limiting salmon populations.
In short: we need to remove car dependency from our land use planning ASAP. And that's not even considering the climate implications...
greatly? how much of energy usage is from work commute?
And for gasoline, trips like this are nearly all of the demand.
If only it were possible to stack dwellings on top of one another. Perhaps someone like Elon Musk will figure out a way!
The boring machine will be putting personal sleeping tubes all along the tunnels, allowing people to hop straight onto their commute. Disruption!
The specific intervention under discussion is to change the housing situation. Allow more housing to be built close to jobs. This is not set in stone, it's just the arbitrary laws that were made in the mid - to late-20th century as a way to enforce racial and economic segregation in communities.
And we don't need to ban all cars to greatly reduce their harms. Cutting VMT in half would provide great benefits, and could be done without forcing anybody to give up their car.
The number of e-bikes I see on the roads today is absolutely immense compared to pre-pandemic days, and this will hopefully continue as we make biking safer by providing more protected lanes. And as fewer people drive, biking also becomes safer. And as we have fewer long stroads because there's less demand for driving, biking also becomes safer and more attractive.
But it all starts with city planning, and allowing the people who want to live close to groceries and child care and work to live in mixed use neighborhoods. And the major blockage to that is a small law that can be flipped quickly.
The OP was specifically recommending adding such housing:
> Isn't a 'quick fix', but legalizing the production of various shapes and sizes of housing would help a lot of people, especially long term.
The reason the housing isn't there is because massive parts of our cities are zones to prohibit building dense housing, or housing+commercial together.
Those who are hardest hit by housing shortages are those with the least. And those who benefit the most are those with the most skin in the financial land-ownership game. And when those new luxury apartments are stopped, that isn't turn hurts those with the lowest incomes the most, because rather than the high incomes financing new building, those high incomes chase whatever else housing they can find, which raises prices all over, in addition to kicking out those with lower incomes in a game of musical chairs. And since in a market economy, if we only trickle out a tiny supply of new housing, that newest supply will only go to those high incomes, since newer housing is generally far more desirable than old housing that is worn down. So complaining about the high cost of new construction, without complaining about the ever rising cost of the existing housing stock, is tremendously damaging to housing affordability.
I also favor a controversial option, but I think that there should be state- or federal-level agencies that build housing countercyclicallt, to ensure that when there's a construction downturn, that labor can continue to be employed, and the workforce remains steady, competent, and capable. The boom bust cycle for construction drives up construction prices significantly by labor shortages followed by labor shrinkage, which is hell on labor's personal lives too.
Inflation doesn't work that way. Nor does "printing money"
This inflation is caused by actual short supply of goods seemingly from putting multiple chips on everything.
The inflation fear is what is driving up the bitcoin prices which in turn is driving up the chip demand. This inflation is partly a supply chain latency issue and partly hysteria driven
The supply of goods hasn't really changed much. Labour supply is lower by a couple of percent. Raw materials prices up a bit. Demand is up by something like 20-30%.
Also, it is worth noting that what you are seeing in the US is worse because there has been the highest level of growth in govt spending (over the past few years, to be clear), and the most amount of fiscal leakage. Even Canada, which really went balls to the wall, isn't seeing the same level of inflation.
A good explainer is - https://www.bridgewater.com/its-mostly-a-demand-shock-not-a-...
No, it wasn’t: https://tradingeconomics.com/united-states/government-spendi...
Trump's tax cut - 12% of GDP CARES - 12% of GDP Further stimmy (iirc, this was a bill passed in December after the election) - 5% of GDP Biden Stimmy - 10% of GDP Infrastructure Bill - 15% of GDP
This is why the CBO's projections have suddenly become very controversial. As I made clear, this is not all current spending. It is difficult to talk concisely about all the packages above because the cadence is totally different but the quantum of the effect in the medium-term is 40-50% of GDP (it is probably a bit higher tbh). This only becomes apparent over the medium-term and future % of GDP, obviously, depends quite heavily on GDP growth elsewhere in the economy. The size of the fiscal stimulus being applied however is massive (the chart you linked me shows 10ppts of growth...you realise this supports my argument? 25% growth is a lot in one year...it hasn't happened outside of wartime afaik).
The neoclassical economists have been very very very wrong about inflation.
For basics, not distinguishing between cost-push and demand-pull is a pretty basic error.
You're looking at aggregate. There are specific types of goods, the lack thereof, that's driving up the CPI. Right now I hear the car prices in US are pretty high and the production is lower because of the chip shortage.
The supply for a lot of other things is pretty elastic.
[1] https://www.semiconductors.org/chipmakers-are-ramping-up-pro...
> Why isn't this excess demand (caused by too much free money) as opposed to a "shortage"?
It might very well be excess demand. The idea is that supply should always be elastic and grow to meet the demand. In this case it didn't.
But this "excess demand" can't be attributable to lower interest rates because people, I imagine, aren't borrowing to buy these goods.
This irritates me so much. I don’t need or want computer chips in most of my appliances. Outside of what is needed for the efficient operating of an engine, I don’t want a bunch of electronics in a vehicle. If the shortage is just chips, could we go back to manufacturing goods without them? It’s what I wanted anyway.
Purely mechanical designs are more expensive and harder to make.
17% of the US spends more than 50% of their income on rent.
There is a major, major housing issue in the US and it's only getting worse.
If energy prices are up significantly, I'd expect that to have a much larger than 1% impact on prices as a whole. Much more than the impact of gasoline prices in isolation on the basket of goods.
> Prices of synthetic fertilizer, which rely on natural gas and coal as raw materials, have soared amid an energy shortage and export restrictions by Russia and China. That’s adding to challenges for agricultural supply chains at a time when global food costs are near a record high and farmers scramble for fertilizers to prevent losses to global crop yields for staples.
> The Green Markets North American Fertilizer Price Index is hovering around an all-time high at $1,072.87 per short ton, while in China, spot urea has soared more than 200% this year to a record.
> In the U.K., not only are farmers scrambling for animal compost, but many are even trying to get their hands on treated sewage sludge containing human excrement, or biosolids.
https://www.bloomberg.com/news/articles/2021-12-09/global-sh...
This is one of the reasons why we need to electrify the economy ASAP, especially long haul commercial logistics vehicles.
Unlike gasoline electricity can come from at least a dozen or more (thus, diversified) sources. This means that electricity should remain cheap, as any cost increase in terms of c/kwh only makes other sources more profitable. For example, if electricity doubled then the payoff period for solar just halved etc etc.
Liberalizing zoning and implementing LVT would help, but it would means massive structural change in our society. It's a true fix, but that true fix requires that we have important and difficult conversations about said structural changes.
This is a huge drain on the economic productivity of the younger generations, and anybody who was not able to afford to buy in to the scheme before the recent climbs.
It's time to make housing behave at most like a savings account, rather than an investment account.
> This is a huge drain on the economic productivity of the younger generations
Economists have attempted to quantify the effects of this, and the numbers are huge: https://www.aeaweb.org/articles?id=10.1257/mac.20170388
Depends on jurisdiction. Canada's housing market has most of the same problems as the US's, but you can't really lock in low interest rates for longer than five years - so if you raise interest rates, you leave people five years from now underwater and having to renew for the next two decades at high rates.
How so? The only downside (for people who already own a house) I can see of building more housing is that prices wouldn't rise as much as they historically have. AFAICT rising house prices only benefit real estate speculators, not actual homeowners who live in the house - my taxes are a percentage of the appraised value of the house, and they go up every year to the point where I'm starting to wonder if I'll be able to afford them in 10 years. I can't really "cash out" the value I have in the house either - or I could, but then I'd have to buy another house to live in at the same inflated prices.
It sounds like you're just wanting to punish people who saved their money and put it in a wise investment, when actually, that's what everyone should be doing.
My buddy's dad owns 20 properties, preventing younger generations from owning a place for themselves.
Just imagine how much value and how many jobs he could've created by investing that money into manufacturing instead of increasing rents and making younger people's lives more miserable.
I suppose if I had a larger family I would want more bedrooms. But we are done growing our family at this point - and mine is roughly the size of the median, so I don't see why we need to flood the market with homes that are too big.
If you zoned more places to be walkable and lowered rent for the kinds of places people wanted to walk to you wouldn’t have to cram people into a few desirable places.
https://www.vox.com/22524829/wall-street-housing-market-blac...
> If you zoned more places to be walkable and lowered rent for the kinds of places people wanted to walk to you wouldn’t have to cram people into a few desirable places.
Yes, we should absolutely relax zoning! But rents are set by the market, by and large. You drop them by allowing housing to be built to meet market demand.
i.e. make them an offer to buy their property which they, of their own choice, accept.
> If you zoned more places to be walkable and lowered rent for the kinds of places people wanted to walk to you wouldn’t have to cram people into a few desirable places.
I'm unclear on what your point is now. Lowering the rent means allowing supply to respond to demand (since we don't set market rent by fiat), i.e. allowing developers to make offers to buy parcels and upgrade them to higher density. Are you for this or not?
1500 sqft is 140 m^2, my first apartment was 30m^2. I can't imagine what you would put in a 3500 sqft (325 m^2) house, never mind something like answering the door if you were at the other side of your house.
But I believe that the GP's point is that "more housing" usually means "more, primarily smaller, units". And that may in fact be true. Though, if you can get a small apartment rather than live in your car, you're still moving up, even if the average square feet per unit moves down.
Very few do.
> and in any event, it should be a choice.
It is a choice, if you can afford not to. That's why the people in those environments are disproportionately both the very poor who can't afford to choose and the very rich who can afford the expense of mitigating the harms; the people who aren't super rich but can afford to choose just tend to choose not to live in dense environments.
> Very few do.
So the people living in NYC, LA, Chicago, etc are not living well? That's news. Tell me how else I'm not living.
Outside of the very core of these cities, you can live, and live well while benefitting off of all the things large urban centers provide (culturally, financially, etc).
Not the ones that aren't making significantly above national median income, no. High income work (and even more so large acal5 capital ownership) makes it possible for people to afford to mitigate the downsides of dense living, which is why the presence of high wage work and capital returns leads to more people voluntarily accepting sense living conditions.
Eliminating the choice of low-density living by reducing availability will force more people who can’t afford to mitigate the downsides of dense living into it.
(We need more dense housing in places where it will relieve the problem of people being unhoused; those people already typically experience dense conditions with added downsides; but forcing people who would otherwise choose to be housed in lense-dense conditions into dense conditions is reducing the quality of life.)
OP is asking for it to become a good choice by fixing the problems that lead it to be a poor choice right now.
The main way of mitigating it is spending lots of money to make your own living conditions not dense, despite living in an area that is otherwise dense.
That is, it is convenient to live in an area where services and amenities and the people needed to staff them are dense, so long as you personally can afford not to be packed in a tin like the rest of the sardines.
The issue at hand is that many economic centers like San Francisco are adding several times more residents than housing units. There's onerous zoning and processes by which existing residents can block new housing. There's also price controls that disincentivize housing. These factors cause a chronic undersupply of housing, making housing very expensive even though San Francisco isn't all that dense. That's why almost all the YIMBY attention is on urban areas like these experiencing housing shortages.
Why would they push for more housing in suburban and rural areas that aren't experiencing chronic housing shortages? Most rural areas have shrinking populations.
Why is proximity to amenities and jobs so important? Many people spend hours of their lives driving themselves from home to work, the grocery store, really anywhere of interest and back. Driving is such a strong requirement we rarely revoke drivers licenses, even when drivers kill others through their negligence. Driving is expensive (costs thousands per year), dangerous (drivers kill 30,000 people a year), and leads to a sedentary lifestyle that is bad for your health. The quality of life impacts are massive.
From personal experience: living and working in San Francisco I would easily hit 10,000 steps per day just going about my daily life. When visiting the car-dependent suburb I grew up in for the holidays, that dropped to almost zero. It's no wonder obesity rates, life expectancy, and therefore quality of life is lower in these areas.
Only the wealthy with the money and time to spend on exercise (in addition to the extra transportation costs) are able to mitigate these deleterious harms. Car breakdown? You are literally unable to do anything, and incur massive costs in emergency repairs in addition to possibly losing your job. The poor are more likely to defer maintenance and buy older vehicles, so they are likely to fall into a vicious cycle of payday loans due to a something like this.
Are you sure that's causation and not correlation?
https://ec.europa.eu/eurostat/statistics-explained/index.php...
https://www.cityam.com/almost-a-fifth-of-all-us-dollars-were...
> But this is what so much of the money supply represents – money that has been issued and is just sitting around unused. Why is this useful? It’s like calculating your weight changes by counting how much food you have in your refrigerator. No. That’s potential calories consumed and potential weight gain. The amount of food in your fridge tells you little about your future weight changes just like the amount of money in the economy tells us little about the actual price changes in the economy.
* https://www.pragcap.com/three-things-i-think-i-think-i-see-d...
It actually has to be used, which it generally has not been:
* https://econbrowser.com/archives/2021/11/so-you-want-to-be-a...
maybe it comes down to where does it need to be used (as in which level, capital investment and other long-term assets in contrast with consumer goods)?
This money is quickly finding its way to consumable (and other rent-like) purchases, so now it does trigger inflation whereas in the time around 08 the end consumption was not really affected (it is now because pandemic)
Inflation is roughly defined as more dollars chasing the same quantity of goods leading to price increases. It's clear how printing more money would lead to that, but what if the Fed prints more money and it just sits in bank accounts? Hence the velocity component -- people need to actually spend the money for inflation to come into play.
The confusing thing now is that since the US has been in a liquidity trap for a long time, velocity isn't even the right measure. This is a mirror of what happened in Japan in the 1990s and is still happening today;
https://www.brookings.edu/wp-content/uploads/1998/06/1998b_b...
If this is not the case, the reasoning is counterintuitive.
I thought that in 2008 but we had a decade of low inflation.
If they hadn't printed all that money, a lot of prices would have stayed flat - and perhaps a lot more folks would feel much richer right now.
Actually globalisation has plateaued over the last decade.
https://www.economicshelp.org/wp-content/uploads/2019/03/wor...
Someone please correct me if I am wrong.
The mortgage rate may be 3%, but the cost of your home increases at a much higher number causing the value you have in mortgage rate to be offset by the higher up front cost of a home.
People 'buy' a mortgage payment, not a home. Its why home appreciation 'slows' when rates are high, and we have had record increases in home values with mortgage rates super low.
However the 3% is guaranteed for ~30 years, so it's likely the bank would still come out ahead in the long run if inflation settles down. It's also not an infinite money slot machine -- you can only qualify for so many mortgages (which require large down payments) and houses are pretty illiquid assets.
Low-interest rates on mortgages are a huge boon for sellers since the buyers have access to more money, and thus they can pay more. So, for the buyers, the "get paid" part only works if they flip a house and become sellers before the cycle bubbles and bursts.
Meanwhile, buyers who want to get a house just to live in it for the rest of their lives are having to pay much higher prices, and it has nothing to do with real supply and demand. Cut out all the speculators/investors/flippers and the situation would be very different.
Maybe we shouldn't even continue the premise that a person who doesn't live at a property can "own" it.
A 3% APR mortgage comes out to about 4% APY, which is a little more directly comparable to an annualized inflation figure.
all items ............ 6.8%
food ................. 6.1%
all less food & energy 4.9%
energy ............... 33.3%
energy commodities ... 57.5%
energy services ...... 10.7%Annualized Core CPI is 3.29%. +1.3% higher than the target.
My first order guess is that Fed will decrease asset purchases gradually and an interest rate hike in the next summer might happen if the long-term core inflation is higher than normal. This seems to be what they are communicating.
And raising interest rates won't solve the chip shortage hurting the new / used car industry.
I think this is true but only to a certain extent. People can make sacrifices to reduce transportation demand. Making a single trip, getting a smaller vehicle, or carpooling are options. The issue is that we've lived in a luxury transportation world for a long time, and people may be unwilling to make those sacrifices.
Maybe there is some idiot out there who doesn't need a car but just likes having an autopayment burn a hole in his wallet every month, but is that person going to be dissuaded by a 1% increase on interest rates? There may be a few people right on the cusp of not needing to purchase a car who could be moved over the edge, but these are a tiny minority, and their shift in behavior won't have a serious impact on prices.
Regardless, the fact is trying to reduce demand is just a bad solution to shortages. Increased demand justifies the investment in new equipment and infrastructure to meet that demand, which in the long term leads to lower costs all around, and increased employment which in turn fuels more healthy growth. While in an emergency you might want to ration something just so nobody starves, cars aren't an emergency supply.
I hope you recognize this is so far outside current economic consensus that I can't even call it a heterodox theory. It's just wrong. This is the same logic used to justify repeated interest rate cuts in Turkey, which is causing disastrous inflation.
Interest rates also represent the opportunity cost of money. An increase in rates leads people to save rather than consume, decreasing the velocity of money and tending to lower inflation.
I'm in no doubt that HN readership is mostly US-based, but it's definitely global...
The next year pandemic will hopefully be over, but if employment still hasn't fully recovered, we can see even more inflation.
Pre-Covid I could send a parcel with two-day delivery for $X or next-day delivery for $1.5X
Now, I can still buy "next-day delivery" for $1.5X but the parcel takes two days to arrive. On paper, the service's price hasn't changed - but in reality, it's 50% more expensive.
I'm curious if economists have a formal study of this.
Customers tend to be most sensitive to price changes, so we'll probably see more and more of these non-price inflation changes.
https://www.bls.gov/cpi/quality-adjustment/questions-and-ans...
This can occasionally result in odd things, like when the introduction of unlimited cell phone data plans led core inflation to drop one month for first time in seven years:
If you're not driving or buying a car, it doesn't look as bad, though energy prices affect everything else, too.
You must be living under a rock, or willfully blind.
https://www.politifact.com/factchecks/2021/dec/01/facebook-p... says there's none at least (and shows its work)
- an operational model of our economy that includes failure modes, like queue failures
- open source software that can easily and reliably represent this model and simulate trajectories
- government and news reports should reference the exact configuration of the model that expresses what they are reporting
Access Denied
You don't have permission to access
"http://www.bls.gov/news.release/cpi.nr0.htm" on this server.
Reference #18.14645e68.1639219418.12814b8eBut consider:
1. gold, the traditional inflation hedge, is at the same price it was in 2011 (~$1,800) after having gone nowhere in the last year
2. the 30-year treasury is yielding 1.85%, a real yield of -4.95%
3. the Eurodollar futures curve recently inverted [1]
4. The dollar is up noticeably against other currencies [4]
The "pumping money" idea makes no sense based on what QE actually does. Here's how QE works. The Fed buys a Treasury from a bank. In exchange, the Fed credits the bank with a reserve asset. That reserve asset is held in an account at the Fed and can not leave the Federal Reserve system. Nor can it be used to buy stocks, bonds, or CEO yachts. This is not "money" in the sense that most people think of the word. It's more like a kind of utility token. QE is a way to turn treasuries into reserve assets. In other words, it's a swap with no net money creation.
Regarding (1), some say derivatives are to blame for gold's abysmal performance. Well, similar derivatives markets exists for stocks, and those have been ripping higher thank you very much.
Well, the consensus view says, (2) is explained by the fact that the Fed controls the Treasury market. But does it really?
Consider the observable effects of QE by taking a look at a chart of 30-year treasury yields since the early 1980s and you'll see a straight channel running down and to the right. QE had zero effect on this long term trend line.[2] If the Fed actually "controlled" the treasury market during QE, wouldn't the trend line be broken in some way?
The most esoteric of these factors is (3). Still, the Fed's balance sheet has no eurodollar futures. So why is that this market is signaling lower yields and slower economic growth ahead?
Bottom line: the Fed is being blamed for skyrocketing inflation. However, there's a case to be made that the Fed's actions have little to do with what's going on because QE's effects on the economy actually make little difference. See, for example, the Bank of Japan, which tried QE long before the US and concluded that its effects were mixed at best.[3]
All of this leads to the conclusion that this kind of inflation print is a blip, and the Fed had nothing to do with it. In other words, inflation really is transitory. Gold, treasuries, and the eurodollar market are all signaling slower growth and lower inflation ahead. Possibly much lower.
QE is largely a confidence trick. It's time to have a closer look at the man behind the curtain.
[1] https://www.bloomberg.com/news/articles/2021-12-03/bets-that...
[2] https://fred.stlouisfed.org/series/DGS30
[3] https://www.frbsf.org/economic-research/publications/economi...
If the Fed is behind the inflation, there is something we are missing. For example, I have personally struggled to find what bank reserves are useful for.
I surely doubt they're totally useless. I can only assume that they are a more preferential asset with relation to the Basel requirements on further loan creation. But since banks are not constrained by these requirements right now (as far as I understand), it's unlikely to have a meaningful effect.
Another way to look at it is that this is putting a floor on Treasury asset prices, which could in theory somewhat translate to asset price inflation as more market participants are able to liquidate their treasuries at a higher price, whose dollars would then go into other assets.
An alternate take is Jeff Sneider's - where he says that QE (and central bank actions, in general) are more of a tool for instilling confidence in the market rather than anything else.
Fixed income (i.e. retired people) because their stack of savings buys less.
The poor because if you can't afford new tires at $600, you're surely not going to be able to afford them at $800.
Politicians need to be very careful with inflationary decisions.
(Oops, not true, I just didn't notice it. Good job NYT!)
https://www.thegrayladywinked.com/
This isn't a recommendation (I'm not through it yet) but it's an interesting perspective.
It looks like the author is taking well-known, well-covered historical embarrassments by the Times, and plugging in current conservative talking points.
I rather like the 1619 project and its narratives, so perhaps I'll add some books to my list for the coming year to be able to call bullshit on that or not.
In general my promotion of things that increase skepticism in statements made by authority (such as the NYT) outweighs my disdain for the brawlers in the current US culture war.
What I've found is that there is no disagreement over the facts presented, only interpretations of those facts. I've searched, in vain, for reputable historians challenging specific factual claims made by the project. I haven't read one.
The largest, credible criticisms are more or less either a tone argument ("Slavery was A motivation of SOME") or alternate fact discussions, some of which are interesting but none of which I'd count as discrediting anything.
The rest of what I've read is mostly Founding Father Worship which I have zero time for.
It's also right on the front page of NYT.com
When you average those two out (cagr), that's 4%. Nothing to sneeze at, but still a lot less.
It's nice to be part of the pyramid scheme! ;D
I live in NYC and went to CVS recently. Picked up the following:
* 12 pack of Bounty paper towels
* a box of Q-tips
* contact lens solution
* 6 pack of Smart Water
Cost me over $50 bucks. This sucks.
(CVS isn't as expensive as convenience stores, but they aren't as cheap as grocery stores either.)
Wonderful argument lol
The socialist argument does it this way: inflation obviously only happens when prices are actually raised, and that's done by the sellers of things, so if the sellers simply decided to keep their prices unchanged, they would stay unchanged. That's absolutely true and doesn't depend on anyone else. Biden didn't sign a law requiring anyone to raise prices.
I suspect you can find some way to complain about that argument, and maybe your complaint will make sense. But if you want to pick ONE blame point for price increases, the one that is best is the point where some person directly chooses to raise prices. Besides that, it's all very complex.
HNers are not a rational bunch when it comes to economic and monetary policy lmao