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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

#591

Post by tharkun__ »

lumost wrote: post #572
tharkun__ wrote: post #571

Earlier quoted context omitted.

Absolutely agreed that there are worse categories than your phone/internet/tv bills. And yet even this relatively small and apparently I Yunsignificant non-discretionary (or was some of it discretionary? Or all of it?) item still makes up 4.5% of your net income. That I still call significant. Once I have a house the inflation on that also doesn't affect me that much any more (sure, evaluations increase my tax bill -…

The underlying problem here is that one of our numbers must be wrong. The options I could see are 1. The marginal cost of housing has little to do with what individuals pay in the short-term. 2. The median income earner requires or will require substantial subsidies or raises to keep pace with the increased costs of their home. Roughly 3-4% per year assuming that housing is the only item inflating. 3. Either the medi…

All very fair points. I think one thing that makes a huge difference is whether you rent or own. There's obviously so many nuances to this all.

I realize that we (or at least I am) also mixing up various things, even though I chose to quote a particular city's median income for the example.

If you are renting and your rent goes up 10% that obviously has a large effect. If you have a house and rent goes up 10% you don't care at all. If rent goes up like that, it's probable that house/condo sale prices go up too and you have to pay more in taxes. I bet the increase in taxes makes a smaller hole in your pocket, though I might be completely wrong. But this also depends on whether we stick with the example or move on to other countries, where there's no such thing as separate municipal/school taxes or where rent control is in place.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#592

Post by sudosysgen »

rland wrote: post #580
sudosysgen wrote: post #402

Earlier quoted context omitted.

Economies do not necessarily have to follow differential equations with highly volatile second derivatives. In fact, historically, they haven't. This is only possible because of the volatility of capital markets that lead to even higher volatility in production which leads to volatility in general markets which leads to volatility in capital markets again - there is a loop of unstable prices. And this loop is the uni…

I think he's making a more general point. Basically every time varying system, no matter how complex, can be thought of as a system of differential equations. Human systems of production -- any such system -- is a time varying system, and as such, probably has some cyclic behavior, instability, etc. somewhere inside.

Of course. But not every system of differential equations leads to chaotic large scale behaviour.

I gave examples of economic systems that do not.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#593

Post by sudosysgen »

jerf wrote: post #586
sudosysgen wrote: post #402

Earlier quoted context omitted.

Economies do not necessarily have to follow differential equations with highly volatile second derivatives. In fact, historically, they haven't. This is only possible because of the volatility of capital markets that lead to even higher volatility in production which leads to volatility in general markets which leads to volatility in capital markets again - there is a loop of unstable prices. And this loop is the uni…

The USSR experienced all sorts of issues like this, where the central management would first over supply something, then react by massively undersupplying it, then overreact in the other direction. It also experienced a total collapse . It makes no sense to point to it as a model of stability. (Also, as you read my message here, recall my claim isn't that communisms has cycles and capitalism doesn't, but everything d…

Just because a set of differential equations has -d^2/dt^2 somewhere in it doesn't mean that it will lead to an increasing amount of instabilities that will eventually lead to spontaneous -30% economic activity.

The economy of the USSR, in aggregate, literally only ever suffered two recessions - one in 1963 due to political instability (which was a very minor fall in GDP), and one at the beginning of WW2. The collapse of the USSR itself was a purely political issue - the USSR maintained growth right up until its dissolution.

I understand your point, but it is a case of diagnosing a second-order effect but not taking into account it's actual impact. Outside of capitalism, there were not really any economic systems that had such gigantic vorticity that they would spontaneously enter disastrous depressions.

Those cycles that you diagnosed, for example, eventually ended up by either a worker lying to stop the cascade, or someone at the planning office realizing the issue. They never snowballed into a Great Depression, because that simply could not happen. The reason the behaviour of unrestrained vorticity is possible in capitalism is because of capital markets. Without capital markets, or an equivalent, the behaviour you are diagnosing is inevitably dampened.

Think about it like a PID loop - there is a -d^2/dt^2 term in it, the D-loop term. But because of the I-term and the P-term, if you tune it correctly, general error always goes down over a full wavelength. Capital markets allow the D-term to overpower the loop.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#594

Post by freyir »

throwawaygh wrote: post #574
jbay808 wrote: post #384

Earlier quoted context omitted.

> But, this describes maybe a few dozen housing markets. Probably only a couple dozen if you cut out resort/ski towns. It's a regional problem It, uh, describes all of Canada actually. https://www.reuters.com/article/us-canada-economy-housing-an...

That's totally fair; sorry for assuming the thread was US-centric.

It also describes the most populous US state. The median housing price is now over $700k in California, while the median household income is around $80k.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#595

Post by jobigoud »

Cthulhu_ wrote: post #157
european321 wrote: post #150

Earlier quoted context omitted.

Most shipping companies in the stock market have rocketed in the past 2-3 months, so that opportunity has passed I think.

Common stock advice: if you hear about an investment opportunity, you've probably already missed out. Ex: Bitcoin stocks (yes they're stocks / investment products) are only really reported on when they're at an all-time high. They may go up a little more if you're reading something fresh off the press, but it's not going to go up as much as it already has. I mean if you bought a year ago you could have had a 10x retu…

That's the reasonning that prevented people from buying the ATH when Bitcoin made the news in 2011. And in 2013. And in 2017. And 2020.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#596

Post by fennecfoxen »

SilasX wrote: post #405
fennecfoxen wrote: post #400

Earlier quoted context omitted.

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.

That's still equating technological deflation with (absence of) money-induced inflation, and it still assumes that the more powerful computer can displace the effects of food price inflation (or that the out-of-date computer can keep up with the same present needs). Also, Dudley said: >>“Today you can buy an iPad 2 that costs the same as an iPad 1 that is twice as powerful,”

> it still assumes that the more powerful computer can displace the effects of food price inflation

Well, yes-kind-also-no?

It's not an index that describes the cost of necessities or human survival. It's an index that describes how consumers spend money on goods and services, such that the value of the money remains more or less constant.

In that sense, yes, people's computer-money spending patterns can affect the price of food. Literally anything else in the index can do so as well. No, the index is not "assuming" anything can "displace" food; it's just never set out to be a thing where food is this sort of baseline.

I can't be 100% sure, but you seem to think that there should be an index which cares more about food. Moreover, you seem to think that more public policy should revolve around this price index rather than the vanilla CPI that is currently used.

However, I would suggest that monetary policy is far blunt an instrument. It is one of the least-targeted tools possible, with the largest set of possible side effects, and food is too small a slice of the economy.

There's a reason we go for economy-level price stability instead of sector-specific. Imagine if the US had a real bumper crop, more corn and soybeans than you could eat: to meet food price stability targets the Fed would be obligated to shrink the money supply until the corn was as expensive as it used to be, and everyone's mortgages, loans, and credit cards would be harder to pay off.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#597

Post by coolgeek »

souprock wrote: post #543
lotsofpulp wrote: post #418

Earlier quoted context omitted.

>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. It's done an absolutely terrible job for the past 15 years, for my lifestyle and where I live. I suspect it hasn't reflect many other people's budgets either, hence the common argument of official CPI figures being nonsense. I don'…

My anecdote is as valid as your anecdote. Life got cheaper over the past 15 years, not counting changes in family size. I used to have insurance co-payment, a deduction from my paycheck, and an unreachable out-of-pocket maximum. All of that has changed. I used to pay about $1200 rent for a crummy house in a dangerous neighborhood. Now, with a paid-off mortgage, I pay just $266 for property tax on a house that is 3109…

> My anecdote is as valid as your anecdote

In this case, technically true is not the best kind of true.

If we generalized both of your anecdata to either

  - health insurance and housing got cheaper for everybody, or 
  - health insurance and housing got more expensive for everybody
which would be more accurate?

> If I look back more than 20 years instead, to when I was in college, I can see that college has gotten cheaper

Again, that is not generally the case. In fact, the growth in education costs has substantially exceeded the inflation in most other sectors

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#598

Post by harambae »

jbay808 wrote: post #552
AlexandrB wrote: post #317

Earlier quoted context omitted.

Also for people that put their life savings as downpayment on an overpriced house.

Maybe the government can raise rates and offer some kind of refund to people who bought their first house in the last year? Otherwise, the number of people in that "put their life savings as a downpayment on an overpriced house" category is only going to grow, making the problem worse when the collapse eventually happens.

>offer some kind of refund to people who bought their first house in the last year

I think we run into real problems in America trying to protect people from the consequences of their own bad decision making. In addition to being deeply patronising, it eliminates so many of the normal incentives to be responsible and pushes up risk appetite across the board.

If individuals make poor investments (whether on a house or gamestop otm call options) they'll learn their lesson and move on. There's enough of a safety net in America to ensure no one truly goes hungry from bad luck (and before you point to homelessness- that's a complicated issue intertwined with drug addiction, mental illness and in some cases a free lifestyle choice)

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#599

Post by souprock »

coolgeek wrote: post #597
souprock wrote: post #543

Earlier quoted context omitted.

My anecdote is as valid as your anecdote. Life got cheaper over the past 15 years, not counting changes in family size. I used to have insurance co-payment, a deduction from my paycheck, and an unreachable out-of-pocket maximum. All of that has changed. I used to pay about $1200 rent for a crummy house in a dangerous neighborhood. Now, with a paid-off mortgage, I pay just $266 for property tax on a house that is 3109…

> My anecdote is as valid as your anecdote In this case, technically true is not the best kind of true. If we generalized both of your anecdata to either - health insurance and housing got cheaper for everybody, or - health insurance and housing got more expensive for everybody which would be more accurate? > If I look back more than 20 years instead, to when I was in college, I can see that college has gotten cheape…

I'm not so sure college has gone up in price, all things considered. The sticker price is much higher, but people aren't usually paying sticker price.

Discounts (scholarships) are much more available.

Stuff like dual-enrollment has spread across the country.

AP is now widely available.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#600

Post by coolgeek »

souprock wrote: post #599
coolgeek wrote: post #597

Earlier quoted context omitted.

> My anecdote is as valid as your anecdote In this case, technically true is not the best kind of true. If we generalized both of your anecdata to either - health insurance and housing got cheaper for everybody, or - health insurance and housing got more expensive for everybody which would be more accurate? > If I look back more than 20 years instead, to when I was in college, I can see that college has gotten cheape…

I'm not so sure college has gone up in price, all things considered. The sticker price is much higher, but people aren't usually paying sticker price. Discounts (scholarships) are much more available. Stuff like dual-enrollment has spread across the country. AP is now widely available.

Just so we're clear, here, you've already gone from:

> I can see that college has gotten cheaper

to

> I'm not so sure college has gone up in price

You seem to be good at finding system hacks for your own, and/or proximal cases. But you continue to generalize your own experience(s) in a way that almost certainly doesn't broadly apply.

Here is Google's first link for "student loan total debt history": https://educationdata.org/average-student-loan-debt-by-year

Some stats from that:

  - Student loan debt at graduation has increased 76% since the Class of 2000, a growth rate that outpaces the rate of inflation by 41%
  - After adjusting for inflation, the average student loan debt at graduation has increased 326% since 1970
  - Since 2003, the national total student loan debt balance has grown by 602.5%
Of course, tuition prices and student loan stats are different things. But the loan stats make it hard to argue that there is much discounting - in general - of tuition prices
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