Bloomberg is an expensive paywall. Unhelpful.
Food Prices Are Soaring Faster Than Inflation and Incomes
431–440 of 605 posts
Re: Food Prices Are Soaring Faster Than Inflation and Incomes
#432CPI 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…
> 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…
> Many economists, mind you, believe CPI doesn't correct quite enough, and suspect that it overstates the inflation it hopes to measure by around 1%. This is because it tracks the actual prices of a certain "market basket" of goods with specific products in it, and that basket gets out of date, as people substitute products.
Please provide a source to back up this claim, everything I've seen says inflation is /under/-stated, not over. CPI absolutely takes into account substitute products and CPI is not simply tracking a basket of items over time.
Re: Food Prices Are Soaring Faster Than Inflation and Incomes
#433CPI 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…
> 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…
The CPI is about as good an index as the DJIA--i.e. it's pretty meaningless but everyone refers to it out of inertia.
Re: Food Prices Are Soaring Faster Than Inflation and Incomes
#434This 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.
Or, as I like to call it, Magic Monetary Theory.
Re: Food Prices Are Soaring Faster Than Inflation and Incomes
#435CPI 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…
> Technology is deflationary, things should get cheaper because we go after producing them in creative ways one demand is high. And as a consequence the wages you earned by making tech year ago should have less value than the wage you earned today. You should expect small inflation. If you want deflationary money, wages should decline year by year. If you want to save, don't hold cash.
if i want to save, don't hold cash?
hold what then? become investment manager in free time instead of my day job as software developer?
Re: Food Prices Are Soaring Faster Than Inflation and Incomes
#436Earlier 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…
Not an economist either, but I think I can explain that one. CPI is a single rate derived from the change of price in a bunch of goods (houses aren't actually included, as another person noted). A change in CPI tells you nothing about the change in price of a particular good in it; it only tells you how much more expensive those goods are if you bought all of them. Just as an example, let's say milk and eggs are the…
> Using your housing example again, it doesn't really matter if a house cost $200k 20 years ago and costs $400k now, as long as wages doubled over the same period, all things equal. Inflation is fine (for the purposes of buying a house) as long as wages rise to match that increase.
You are missing one crucial aspect: interest rates. 20 years ago, typical interest rate was 8%, so mortgage payments on $200k house were something like $1400/mo. With today’s rate of something like 3.2%, the payments on $400k house are something like $1700/mo, which is 20% higher. To keep the affordability the same between now and then, the nominal wages need only grow 20%, and if they actually doubled, this would hugely increase affordability.
Re: Food Prices Are Soaring Faster Than Inflation and Incomes
#437Earlier quoted context omitted.
> Technology is deflationary, things should get cheaper because we go after producing them in creative ways one demand is high. And as a consequence the wages you earned by making tech year ago should have less value than the wage you earned today. You should expect small inflation. If you want deflationary money, wages should decline year by year. If you want to save, don't hold cash.
if i want to save, don't hold cash? hold what then? become investment manager in free time instead of my day job as software developer?
If you want to be prudent, hold land, stocks, or bonds. Buy-and-forget with stocks, on average, outperforms both inflation, and actively managed portfolios.
Re: Food Prices Are Soaring Faster Than Inflation and Incomes
#438Earlier quoted context omitted.
>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…
you've implicitly bought into the finance perspective, but it's not the only valid perspective by a long shot. consider at least the humanist perspective that people need to live in housing , and that it's not all about money and wealth. this is a critical weakness of many economics perspectives in relation to how the world really works, and an active area of research in economics.
I'll reuse an argument from another comment I made: sure, let's accept that we need to treat housing differently because people need housing. Should we do the same for food? People need to eat as well. Does that mean we should factor in the cost of arable land into the CPI?
Re: Food Prices Are Soaring Faster Than Inflation and Incomes
#439Earlier quoted context omitted.
> Home prices are not captured in CPI, only rents. Yes, because CPI measures cost of buying service of housing. Usually, if housing prices rise, so do rents, pretty much in accord, so monitoring rents already gives you a good view on housing affordability. The extent to which cost of renting is decoupled from house prices is largely explained by changes in interest rates: lower interest rates make mortgages more affo…
> Usually, if housing prices rise, so do rents, pretty much in accord While this would theoretically make sense, it's not actually very true in the United States. There's a significant speculative aspect to housing in some markets that results in price increases far higher than rents would sustain (this effect is actually more prominent in other markets, e.g. Canada). Here: https://smartasset.com/mortgage/price-to-re…
I think it actually is very true in the United States, outliers like SF notwithstanding. US as a whole is significantly more like Plano than like SF. Sure, that does little to make Bay Area residents feel better about crazy housing prices they deal with, but theirs is by far not a typical American experience.
Re: Food Prices Are Soaring Faster Than Inflation and Incomes
#440Earlier quoted context omitted.
Sure, but inflation should be viewed as individual vectors. Each vector corresponding to a delta of price and time in a generalized location for a specific good. Something like the CPI cannot be a hard science as it refuses to acknowledge that each and every person will experience inflation based on the inflationary vectors of goods and services multiplied by a persons relative use of said goods and services. Every p…
That would be the cost of living for a particular person. Inflation is not that. It's literally a change in the price level of an economy, and what they are trying to measure is exactly that.
Yes, the average of the above for the entire economy. I agree, but the methodology of CPI does not at all match anything grounded in the averaging of the above logic.
A proper measure of inflation should start from the individual level and reason from there.
So if on average 1 loaf of bread is bought by a US consumer and a loaf of bread's rate of inflation is increasing(or even decreasing) by %x, and that's %y of the average consumer's expenditure, then that should contribute %x*%y of the overall inflation rate experienced by the average American consumer.
Clearly this is a complex line of reasoning, but it should be the basis of thought on measuring inflation. Yet, housing and medical expenditure are not even considered in CPI. CPI is a terrible measure that I believe was designed to obfuscate.