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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

#501

Post by whoisninja »

JumpCrisscross wrote: post #489
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…

> It's completely subjective and BS Any measure of inflation is subjective. That doesn't make it B.S. Inflation is a measure on a basket of goods. There is no single basket because people buy different things. This is why there is no single CPI statistic. Find a CPI that works for you. The federally-provided ones go as fine-grained as income bracket and metropolitan area. They're extremely precise, but may not be acc…

only if you ignore what kind of impact this stupidity has on financial markets if you care about markets

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#502

Post by j4yav »

yorwba wrote: post #133
j4yav wrote: post #109

Earlier quoted context omitted.

I didn’t really read it as snark. It has historically been pretty shocking here to find a top comment so confidently wrong and just seemingly totally made up (farmers going bankrupt just like the Great Depression.. because food prices are going up?), and it’s fair to directly call it out. It wasn’t done in any particularly mean way as best I can tell.

> It has historically been pretty shocking here to find a top comment so confidently wrong You should not be shocked by that, because every comment starts out as the top comment, votes only affect how quickly it drops. If you come back a few days later and the top comment is still confidently wrong, maybe you can be shocked then.

I promise to moderate my shock as a function of time spent at the top.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#504

Post by curryst »

kache_ wrote: post #345
gruez wrote: post #334

Earlier quoted context omitted.

Because houses are assets, which are closer to stocks than food or cars.

Assets are items that generate cash flow. If you live in it, it's a liability and not an asset. Just because its value increases in relation to funny money doesn't mean it's generating cash flow. How much bitcoin do you need to buy a house?

> Assets are items that generate cash flow.

I would disagree with that. Stocks that don't pay dividends don't generate cash flow either. Assets are items that are bought with the intention for them to generate value. That value might be cash flow, or it might be an increase in value so that you can sell it later. Not all assets generate cash in real time (most don't).

A house is an asset because a) it allows you to pay your liabilities for housing into an equity generating account, and b) people generally expect them to increase in value.

To put it another way, if they weren't an asset, people wouldn't care if they depreciated. I don't care that my car depreciates because it isn't an asset; I don't expect it to increase its value or hold its value.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#505

Post by cascom »

novok wrote: post #473
em500 wrote: post #336

Earlier quoted context omitted.

There's a ridiculous amount of misconception, FUD, and ignorance around inflation / CPI (it doesn't include housing, it overweights entertainent, it exclude food and energy, hedonic adjustments/basket substitutions make everything look artificially cheap) To professional economists, it can be infuriating to read (I imagine similar as medical professionals reading antivax blogs/comments, or radio engineers reading abo…

Is there an index that isn't a 'consumer price index' but a 'cost of living index' instead then? An index that includes the basics of life like food, energy costs, shelter, transport, education, healthcare and some basic consumer goods? I think the issue most have with CPI is it's often sold as a cost of living index by media, politicians and policy makers and it makes people feel unheard as a result. "My cost of liv…

I’ve always wanted to see this + I would love to see two Versions of this, one for a 25th percentile earner, and another for 75th percentile. E.g a) what it costs to rent a modest apartment, drive a Honda Civic, shop at Walmart, have 2.5 kids in public school etc. and B) own a home in a metro area, drive an entry level luxury car, shop at Whole Foods, send kids to private college etc.

It’s my perception that there is not much inflation in some areas of the market (chicken thighs at Kroger) and tons for the “keeping up with the Jones’s” set (organic produce, private school education etc)

My point being that inflation can be quite different based on different baskets of goods / consumption patterns

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#506

Post by helij »

DecoPerson wrote: post #4

After reading this article, I want to stock up on more food for myself and my five dependents. Double our reserves of biscuits, cereals, frozen meat, frozen bread, canned food, preserves, long-life milk, honey, multivitamins, MREs, etc etc. Is this panic buying? Is it OK? Does it hurt other people? I’d be interested to hear some different points of view.

Even in normal times you always need a month supply of everything. During pandemic or any other major crisis event it's probably best to keep 3 months supply of everything. That's not panic buying. That's planning for your and your dependants safety and wellbeing. Don't let anyone tell you otherwise.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#507

Post by loveistheanswer »

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.

>this is the fractional reserve banking system

Seems like we may need a new technical term to replace "fractional reserve banking", because the Fed reduced reserve requirement ratios to zero percent a year ago.

https://www.federalreserve.gov/monetarypolicy/reservereq.htm

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#508

Post by em500 »

pwm wrote: post #363
em500 wrote: post #336

Earlier quoted context omitted.

There's a ridiculous amount of misconception, FUD, and ignorance around inflation / CPI (it doesn't include housing, it overweights entertainent, it exclude food and energy, hedonic adjustments/basket substitutions make everything look artificially cheap) To professional economists, it can be infuriating to read (I imagine similar as medical professionals reading antivax blogs/comments, or radio engineers reading abo…

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…

Other already gave good answers. The main part is that a house is not a consumption product - it is not "consumed" (used up) in a limited timespan, but rather, a bundle of a long-durable part (building) and an ultra-durable asset (land). Pretty much all durable assets have increased in price since the 1980s in tandem with falling interest rates[1]. The cause of the long term decline of interest rates is largely unknown.

The BLS largely circumvents this by using rents, actual rents for renters, and owner equivalent rents (OER) for owners. This is done by asking owners what they think their house would rent for, and using those increases for the housing/shelter component of CPI. Rents (which make up 1/3 of CPI) have increased faster than the general CPI, but not as much as house prices[1], likely because of the interest rate decrease.

There are some other complicating aspects around house prices (city prices increased faster than rural, houses sizes grew while household sizes shrank[3], so part of higher prices is just people buying more). But I believe the main aspects is really falling interests rates. A proper decomposition and attribution of most aspects probably takes months of work, enough for a econ Master theses. That's why I mentioned I don't have the energy for that. Nor do most other bloggers/pop-article writers, so they just go for popular appeal and clicks, by telling you why everything is getting worse and more expensive for you.

[1] https://fred.stlouisfed.org/series/MORTGAGE30US [2] https://fred.stlouisfed.org/graph/fredgraph.png?g=BLyd [3] https://azgolfhomes.com/average-home-size-u-s/

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#509

Post by gruez »

clairity wrote: post #493
gruez wrote: post #438

Earlier quoted context omitted.

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?

you'd asserted a simple statement that houses are (edit: only) assets, which is trivially rejected by showing just one of many other valid perspectives. that there is a spectrum of goods and diversity of economic intricacy among that range doesn't validate your original statement. the broader point is that asserting a house is just an asset is more a value statement (and more abstractly, an aggression) than a truism.…

>you'd asserted a simple statement that houses are assets, which is trivially rejected by showing just one of many other valid perspectives. that there is a spectrum of goods and diversity of economic intricacy among that range doesn't validate your original statement.

Not exactly, because there are two definition of "asset". From wikipedia:

https://en.wikipedia.org/wiki/Asset

>In financial accounting, an asset is any resource owned or controlled by a business or an economic entity.

https://en.wikipedia.org/wiki/Asset_(economics)

>An asset in economic theory is a durable good which can only be partially consumed (like a portable music player) or input as a factor of production (like a cement mixer) which can only be partially used up in production.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#510

Post by em500 »

novok wrote: post #473
em500 wrote: post #336

Earlier quoted context omitted.

There's a ridiculous amount of misconception, FUD, and ignorance around inflation / CPI (it doesn't include housing, it overweights entertainent, it exclude food and energy, hedonic adjustments/basket substitutions make everything look artificially cheap) To professional economists, it can be infuriating to read (I imagine similar as medical professionals reading antivax blogs/comments, or radio engineers reading abo…

Is there an index that isn't a 'consumer price index' but a 'cost of living index' instead then? An index that includes the basics of life like food, energy costs, shelter, transport, education, healthcare and some basic consumer goods? I think the issue most have with CPI is it's often sold as a cost of living index by media, politicians and policy makers and it makes people feel unheard as a result. "My cost of liv…

The CPI includes shelter, food, energy, transport, education, medical care, clothing, recreation, and others, with weights that by and large make sense to me: https://www.bls.gov/cpi/tables/relative-importance/2020.htm

What do you think is missing, or mis-weighted?

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