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Food Prices Are Soaring Faster Than Inflation and Incomes

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Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#391

Post by jerry1979 »

whoisninja wrote: post #237

CPI is a joke, they do something called hedonic adjustments to things like tech products etc. It's completely subjective and BS. Technology is deflationary, things should get cheaper because we go after producing them in creative ways one demand is high. CPI is absurd, it only perpetuates consumerism and punishes savers. We product 2x the food society consumes - mostly wasted away, just with some supply chain efficie…

The Fed uses PCE instead of CPI in their calculations. It might make your argument more convincing if you included an critique of PCE in addition to CPI.

https://www.clevelandfed.org/newsroom-and-events/publication...

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#392

Post by bigwavedave »

reedf1 wrote: post #294
bfrog wrote: post #239

So housing and food has gone up dramatically, but still "inflation is low" is the story. Doesn't and hasn't passed the smell test in a decade.

"But TVs are cheaper!" I guess my TV is a good emergency snack for when I can't afford food.

> "But TVs are cheaper!" I guess my TV is a good emergency snack for when I can't afford food.

Only if it's an Apple ;).

I'm sorry, I'll show myself out.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#393

Post by [deleted] »

dragonwriter wrote: post #382
pwm wrote: post #363

Earlier quoted context omitted.

I'm not an economist. My layman understanding of inflation is that it is the measure of change of purchasing power a unit of currency has over time. I think most laymen, including myself, questions how this rather theoretical concept is actually measured in real life. Eg. I think it is a sensible expectation that if inflation was said to be 2% for 20 years then I should be able to buy a house that cost $200K 20 years…

> My layman understanding of inflation is that it is the measure of change of purchasing power a unit of currency has over time. That's loosely correct; but general inflation is the change in purchasing power for currency buying final consumer goods and services, not assets which are intermediary stores of value. Purchased homes are assets (actual or foregone but using a home you own yourself) rents are consumption e…

[deleted]

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#394

Post by gruez »

CyberRabbi wrote: post #368
fennecfoxen wrote: post #291

Earlier quoted context omitted.

> CPI is absurd, it only perpetuates consumerism and punishes savers. Okay okay back up. The consumer price index is a series of numbers designed to help people understand what dollar-denominated figures mean to ordinary people going about their lives, spending those dollars. If that's "consumerism," well yes, it's a portrait of consumerism. Many economists, mind you, believe CPI doesn't correct quite enough, and sus…

> But if someone's "punishing savers" and "perpetuating consumerism", it's not the index, and it's not the people compiling the index, and it's not the people trying to make the index more accurate by adjusting for quality. I’ve seen this a lot around the net and I’m honestly and genuinely curious. What drives you to defend the CPI?

>What drives you to defend the CPI?

What drives you to question the motives of the commenter rather than responding to his arguments directly?

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#395

Post by koboll »

jackfoxy wrote: post #388

This is the result of the central banks embracing Modern Monetary Theory https://en.wikipedia.org/wiki/Modern_Monetary_Theory as the policy to leave no hedge fund behind and lay the groundwork for UBI. In plain English this is the fractional reserve banking system providing a cornucopia for all. It's really using debt to finance not capital creation, but current consumption. This cannot possibly end well.

>to finance not capital creation, but current consumption

I don't understand the distinction here. Capital creation results from meeting the needs of current consumption, no?

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#396

Post by Robotbeat »

Cars are much safer and (for the same given size) go a lot farther for the same amount of fuel. They’re also faster, more reliable, last longer between maintenance (used to be 3000 miles between oil changes, now it’s... 7500 miles or so), more comfortable, and with more useful features (navigation, phone integration, etc).

As far as homes, there HAS been real estate inflation, but homes are now better insulated, have much more efficient heating and cooling (and now have actual cooling whereas in the past were often uncooled), have more bathrooms, and have much more efficient and cheaper lighting (which doesn’t need to be replaced as often and has lower fire risk).

Clothing is so plentiful and cheap it’s a bit silly (and this used to be a major practical purchase and highly labor intensive to mend your clothes, so I’m not talking just fashion).

A lot of things people actually need really are much better than in the past.

I hope we fix the housing price issues, though. This is really bad.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#397

Post by throwawaygh »

gruez wrote: post #352
throwawaygh wrote: post #338

Earlier quoted context omitted.

Housing prices reflect the cost of shelter for literally everyone who doesn't already own a house. Shelter is much closer to "food" than to "a piece of paper representing a stake in part of a corporation".

>Housing prices reflect the cost of shelter for literally everyone who doesn't already own a house. Right, but using the raw purchase price of the house isn't a good measure. Mortgage rates dropping would cause housing prices to go up even if monthly payments stay the same. What actually matters is how much you spend per month on rent, or if you owned your house, the imputed rent. >Shelter is much closer to "food" th…

> What actually matters is how much you spend per month on rent, or if you owned your house, the imputed rent.

Right, but in most markets rent prices track property values. The long-term upward trend in housing prices is inflation to approximately everyone who doesn't own a house. Which, significantly, includes approximately everyone under the age of 20 or not yet born.

> From a finance perspective there's no difference between a house and a share in a corporation.

From an investor's perspective, perhaps.

But most people are not buying housing primarily as an investment. Most people are buying housing primarily as a way to shelter themselves from the elements.

Consumer finance is finance.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#398

Post by scottLobster »

blaser-waffle wrote: post #242
bryanlarsen wrote: post #176

Earlier quoted context omitted.

Interest rates are at zero. When official inflation starts ticking up they'll raise interest rates which will deflate the stock & house price bubble and cut inflation off at the knees. We have lots of things to worry about -- inflation isn't one of them.

Popping the bubble will be worse than the inflation.

How and for whom?

This attitude that the market must always go up has never worked out historically, just makes the eventual reckoning that much worse.

Fortunately that mentality means that renters like my wife and I who want our future kids to grow up in a good house in a quality school district can just keep saving money, waiting to capitalize on the inevitable normalization when all the speculators and eggs-in-one-basket people fail to learn from history... again.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#399

Post by whoisninja »

jerry1979 wrote: post #391
whoisninja wrote: post #237

CPI is a joke, they do something called hedonic adjustments to things like tech products etc. It's completely subjective and BS. Technology is deflationary, things should get cheaper because we go after producing them in creative ways one demand is high. CPI is absurd, it only perpetuates consumerism and punishes savers. We product 2x the food society consumes - mostly wasted away, just with some supply chain efficie…

The Fed uses PCE instead of CPI in their calculations. It might make your argument more convincing if you included an critique of PCE in addition to CPI. https://www.clevelandfed.org/newsroom-and-events/publication...

depends what you mean by "Fed uses" as blanket term

TIPS use CPI like a lot of other things in bond math: https://www.treasurydirect.gov/indiv/products/prod_tips_glan...

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#400

Post by fennecfoxen »

SilasX wrote: post #380
fennecfoxen wrote: post #372

Earlier quoted context omitted.

The official was correct, from the perspective of economy-wide price stability. The problem wasn't inflation, the problem was expensive food. Obviously, this particular exchange was of no comfort to those who suffer from high food prices, but why should monetary policy be the remedy for high food prices (to the exclusion of its current goals) instead of looking for remedies in fiscal policy, trade policy, regulatory…

Well, there's technically correct, and substantively correct. Most people would take away the lesson that "hey, the current definition of inflation doesn't quite capture the reality of normal people's cost of living", not "computer says no suffering, sorry bro". But I don't think it's even technically correct from the perspective of price stability. The inflation the central bank cares about is the kind that is the r…

The BLS does not include a CPU-megahertz (or gigahertz) in its market basket. It uses CPU speed (and other characteristics) to divide the market into "high-end", "mainstream", or "economy" computers, then substitutes new items in the correct slot when as the new items become available, rather than waiting for the price of the older computer to plummet.
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