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dragontamer

Shelter is .5% growth.

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.

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Letting people live closer to work, shopping, childcare, etc. would greatly reduce the need for gasoline.

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...

> Letting people live closer to work, shopping, childcare, etc. would greatly reduce the need for gasoline.

greatly? how much of energy usage is from work commute?

In California, transportation is the biggest source of CO2 emissions.

And for gasoline, trips like this are nearly all of the demand.

I’ve mentioned tire pollution here in the past. I don’t think you are going to get people to give up personal transportation any time soon. Also living closer to work simply doesn’t work the housing just isn’t there and many live out farther because cost of living close to work increases. I think those are nice goals but the real solution has to be we change what tires are made of. If they are not as safe then we need to lower speed limits and redesign road systems.

> Also living closer to work simply doesn’t work the housing just isn’t there and many live out farther because cost of living close to work increases.

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.

> Also living closer to work simply doesn’t work the housing just isn’t there

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.

The other issue is the new housing that is being built in my inner city is very expensive to rent. They are capitalizing on the shortage of housing so being closer to work isn’t the cheaper option. The areas outside of town are older houses but are often much cheaper. Way too much investment purchases happening. People who don’t ever intend to live in a house just make money off of it. And I’m not against investing but we are getting to the point now that large swaths of the population are struggling to get by. If housing eats up all of ones money they certainly are not going to be contributing to the greater economy which can’t be good for all other sectors.

These concerns: 1) high housing prices of new housing, and 2) non-resident investor ownership of housing, 3) housing costs eating up all the incomes of those with less income, all result from the same cause: too little housing and intense opposition to more housing from those who financially benefit from the shortage. So there's a great solution to stop all these problems: legalize more housing to be built, but with some caveats. We should make the approval process more clear and with less bribery and discretion, and it can happen faster so that there's not a multi year delay between securing financing and actual start of construction, in which time costs change and financing options may expire.

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.

> the housing just isn’t there

If only it were possible to stack dwellings on top of one another. Perhaps someone like Elon Musk will figure out a way!

Or stack dwellings under each other.

The boring machine will be putting personal sleeping tubes all along the tunnels, allowing people to hop straight onto their commute. Disruption!

I would absolutely rent a meditation hole.

Shelter is 33% of the basket weight. Gasoline is like 1%.[1] This is not an energy problem. This is just textbook populist dumb inflation from printing too much money and handing it out for no work/productivity. [1]https://www.bls.gov/cpi/tables/relative-importance/2020.htm

And even at 33% of the basket weight it doesn't represent the truth for many Americans: Which are paying more than 30% of their net income as rent. As of 2018 49.7% of the US is rent burdened.

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.

> populist dumb inflation from printing too much money

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.

I really want an opportunity to unpack this with a real economist, because it doesn't make any sense. How do you define a short supply of goods? We are far above the 2019 supply of goods in nominal terms, in real terms, in terms of shipping containers and actual ships and trucks moving. At what point it stops being a supply issue and becomes an issue of excess demand? And wouldn't this demand be fuelled further by the fear of goods costing more tomorrow than they cost today, again due to the accelerating inflation.

> We are far above the 2019 supply of goods in nominal terms

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.

Again, how do you define a shortage? Chip production is way above the 2019 levels. Moreover the utilisation of the fabs, new and old processes combined is much higher[1]. Semiconductor fab worker count is at all time high, 10% above 2019. Why isn't this excess demand (caused by too much free money) as opposed to a "shortage"?

[1] https://www.semiconductors.org/chipmakers-are-ramping-up-pro...

Car sales are down double digit percentage across the world and used call prices are up 30%

> 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.

"Inflation is always and everywhere a monetary phenomenon." - Milton Friedman

Having been reading about money for the past few years, I have no reason to believe Friedman here.

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.

We’re more likely to find a talking unicorn with a phd than a politician in office who wants to lower spending,

Appeal to authority isn't going to change the fact that this isn't a "money supply" problem.

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

It is amazing to me that people don't get this. Government spending of something like 40-50% of GDP over the past few years. That spending has been leaking into the money supply because the market can't absorb the debt (this is amazing given that all the big exporters own massive amounts of dollars). Handing large stacks of cash to business and consumers. What could possibly go wrong? The last time there was something like this was in the late 60s: the US was consuming heavily, was a huge importer, exporters collecting dollar balances, fiscal expansion into infinity...it is very exceptional (and to be clear, the level of expansion today is something like 4x what happened then).

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-...

“It is amazing to me that people don't get this. Government spending of something like 40-50% of GDP over the past few years”

No, it wasn’t: https://tradingeconomics.com/united-states/government-spendi...

It was. You don't understand what you have linked me.

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).

One of us definitely doesn’t understand something here.

> seemingly from putting multiple chips on everything.

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.

Your steering wheel is fly-by-wire these days. So is the pedals. Antilock brakes, sensor network (NOx sensors and the like), and more are all computer chips.

Purely mechanical designs are more expensive and harder to make.

The gasoline you personally buy at the pump is 1%, the gasoline that runs all the vehicles used to produce and transport everything else is not included in that 1%. That means more expensive food, manufactured goods, services involving travel, etc.

Doesn't the price of energy factor into literally everything else? Every production and supply chain in the whole economy takes energy: gas, gasoline, oil, coal, solar, nuclear, etc.

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.

So does shelter though; at least anything produced by human hands or human minds has a shelter cost baked in somewhere. Every factory has to pay for the land it occupies and the land their workers sleep on. Bay area salaries could probably be slightly lower if Bay area rents were slightly lower. Et cetera...

It's also driving fertilizer through the roof, which is driving food prices. About 3x higher than a year ago. I just purchased 1/2 a cow for the deep freezer and freeze dryer. Some places are even using human waste now as fertilizer.

> 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...

So there is a price point, and I think we have reached it, where you can utilize raw sucrose to culture nitrogenous bacteria, which then is added back to the soil, not only increasing nitrogen concentrations but adding catabolizable biomass back into the soil. This is compared to anhydrous ammonia at $800/ton.

https://www.zillow.com/home-values/

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 in CPI may cover rents instead of just home value?

> 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...

Rents are obviously a lagging measure as they're typically only increased once per year (and by a regulated amount in some markets.) We're in for a world of hurt in terms of housing and rent over the next couple years.

Leases are typically renewed yearly, but is there reason to believe that the start/end date of leases wouldn't be roughly equally distributed by month? They're not all going to renew tomorrow.

That said, the difference in rents and home values is disconcerting.

Gasoline is over 50% in price, and car prices are up 30%.

Shelter isn't even 3rd place.

If house prices went up 50% it would cost me hundreds of thousands of dollars, a lot more than the same gas price increase would. Comparing just by percentages doesn’t tell much of a story.

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.

My house rose about 23% in value YoY based on almost identical units to mine that sold at the end of summer through current.

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.

And how much money did you lose on your house properties going up in price?

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.

It affects the price of anyone looking to buy a house in my city. My house is right in the median price for the area. Rent prices have also risen accordingly.

>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.

To be pedantic, used cars* are up 31%.

New vehicles are closer to 11%.

This.

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.

There is no way to pressure OPEC without military force. They know this is the sunset phase of petroleum, and they want every dollar they can get per barrel of oil before the death spiral accelerates [1]. Shale will, of course, take considerable time to start back up.

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...

Yea exactly, main reason I have a fully electric car. It’s nice not caring about random bullshit that goes on in the Middle East affecting the cost of my commuting. My home has electric heat as well (in addition to oil) should oil become too expensive.

If Opec has already hit peak oil then no amount of pressure can pull blood from a stone.

A better short term and long term solution is to prioritize EV micromobility such as E-Bikes and Scooters for short trips. This may mean reconfiguring roadways and investing money differently. Half of trips are 3 miles or shorter, which is perfect and easy E-Bike/EV scooter distance. Micro-mobility is massively cheaper than car travel which makes it a great solution. Long term transition to EV cars should def be a priority for longer trips though.

Used cars are up over 30% in these numbers. That's bananas.

With the price of cars going nuts, that could be good for EVs.

> With the price of cars going nuts

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.

New cars are pretty bad too. I've been shopping for one all week, and one dealer yesterday had a mystery $1800 charge added to the price. When I asked what that was he explained, "our inventory is currently very low so we're adding this charge to make up for lost inventory". That's right - there was an $1800 "there aren't a lot of cars right now so you'll pay whatever we charge you" charge on the quote.

Be happy that's all it is. The idea of "negotiating" a car price has died in this economy. You let the car sales-person decide just how badly you're going to have to bend over for them - or they find someone else. You should see the markups people paid for a RAV4 prime (a kind of nice soccer mom subcompact SUV). I saw 20000$ markups in some places.

Dealerships and car sales people have always been scum - but an economy like this turbocharges their virility.

> I saw 20000$ markups in some places.

I'll call BS on this. Sounds completely made up.

Just to check I looked at prices on the rav primes. Holy cow… 44k is about the median I saw used. Some upwards of 63k!!!!

These popular all around great cars are getting inflated to hell

Your long term part is quite inflationary as well. If it wouldn’t be more expensive everybody would already driving evs

EVs cost half the cost per mile as an internal combustion vehicle [1], even less as renewables generation increases driving down the price of power.

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...

> EVs do have a higher upfront cost

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.

I suspect it's going to be quite a while before they reach price parity. Even with the current high capital costs supply isn't matching demand. We have to build a lot of battery factories and that isn't going to happen overnight.

Right, you use the green bonds financing to negate the EV/ICE price delta and capital carrying cost of that price delta until manufacturing learning curve reaches the point where the financial engineering isn't necessary.

I don't follow. It's already WAY cheaper to drive EVs over the life of the vehicle. The amortization schedule is different, for now. In the long run that will change: manufacturing EVs is way cheaper and simpler than ICE cars.

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.

The long term permanent solution is public transportation.

Gasoline was quite a bit down when Covid happened, so isn't this just returning to normal?

It's higher than pre-COVID in the northeast

Nah, we were energy independent by the end of Trump's term. Biden's mandates have put a big crimp in oil pumping/exploration here in the US, so now we are, once again, a net importer.

Covid was a part, but Biden put OPEC back in the driver's seat.

This first chart on this page [0] says differently. It seems clear that oil production fell off a cliff in 2020 because of COVID, and has slightly recovered during 2021.

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...

That seems like an oversimplification because gas prices are at a 2012 level.

>Gasoline up over 50% over the year, increasing delivery costs and the price of damn near everything else.

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.

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