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What used cars tell us about the risk of too much inflation hitting the economy

washingtonpost.com

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Re: What used cars tell us about the risk of too much inflation hitting the economy

#21

Post by imtringued »

PebblesHD wrote: post #6

It’s a similar story in Australia, leaving me constantly wondering what exactly CPI or inflation is supposed to measure. Cost of housing, both rented and especially to buy, are up astronomically, food costs about the same but packages are getting smaller, transport costs are increasing, yet the reporting from our central banks is saying all is well and inflation is low. Even if the purpose of their measurement is not…

>, yet the reporting from our central banks is saying all is well and inflation is low.

Low inflation is a catastrophe. I'm surprised you don't know that much. No, things aren't well.

Re: What used cars tell us about the risk of too much inflation hitting the economy

#22

Post by imtringued »

seibelj wrote: post #2

My grocery bill is up 40% from pre-pandemic and I shop at the cheap grocery store. I buy basically the same stuff as I have for the past 10 years. Yet the government claims inflation is minimal. Combined with the value of my property rising and my 401k, I refuse to believe inflation is what the government claims. Huge scam going on here. The government has no incentive to say CPI is rising because that would require…

If the inflation was really as high as you said then deficit spending wouldn't be necessary at all.

Re: What used cars tell us about the risk of too much inflation hitting the economy

#23

Post by sjg007 »

evanlivingston wrote: post #18
sjg007 wrote: post #17

Earlier quoted context omitted.

You can get a cup of coffee at McDonald's for $1. Medium starbucks is ~$2 And obviously it's even cheaper if you make it yourself. I'm not sure what chocolate you buy but I find cadburys dairy milk for $2 or so. Hersheys has a line of chocolate bars at that price point too. You can buy that in bulk too I guess to be even cheaper.

No doubt, these are all purchases I don't actually make with any regularity. But it seems to me like the prices you listed are outliers. Hershey's has cheap chocolate, mcdonalds has cheap coffee, but surely we don't take the lowest price as an example of what those things cost. If 90% of the sellers of coffee charge about $4 for a cup of coffee, can we assume that's roughly the price of coffee?

It’s nowhere near 90%

Re: What used cars tell us about the risk of too much inflation hitting the economy

#24

Post by ab_testing »

perl4ever wrote: post #20
another_comment wrote: post #9

Earlier quoted context omitted.

>> I think it might be time to define a new metric that more closely reflects the actual cost of living. We had different inflation stats back in the day. The US government has been slowly changing them. This guy uses the old official methodology to calculate inflation today. He gets way higher inflation using the old methodology and plugging in todays numbers. https://en.wikipedia.org/wiki/Shadowstats.com There is a…

>I think inflation is definitely higher than reported. I don't, and it's pretty straightforward why. You can argue about how high inflation was over the past year and about technical details. But if you think it's significantly and systematically off and has been for a long time, then it would compound and make a big difference. Back when my sense of "normal" prices was established, a pound of spaghetti was a dollar.…

Interesting that you talk about sphagetti and a honda civic. Now do the same calculation for rent, mortgage or health insurance

Re: What used cars tell us about the risk of too much inflation hitting the economy

#25

Post by perl4ever »

ab_testing wrote: post #24
perl4ever wrote: post #20

Earlier quoted context omitted.

>I think inflation is definitely higher than reported. I don't, and it's pretty straightforward why. You can argue about how high inflation was over the past year and about technical details. But if you think it's significantly and systematically off and has been for a long time, then it would compound and make a big difference. Back when my sense of "normal" prices was established, a pound of spaghetti was a dollar.…

Interesting that you talk about sphagetti and a honda civic. Now do the same calculation for rent, mortgage or health insurance

The government already did, and they got the same answer. My point was that can be confirmed with something that is easy and simple to estimate.

I guess you're implying that these things could diverge and the inflation rate matching could just be a coincidence.

But I don't think it's possible, because they're all part of a feedback loop. The people who build cars have to pay for rent and health insurance. The people who manage apartments and work for insurance companies eat and drive cars.

Edit: The selling price of my home in 2019 was 53% more than the selling price in 1995. The CPI was up more, roughly 70%.

Re: What used cars tell us about the risk of too much inflation hitting the economy

#26

Post by tanseydavid »

imtringued wrote: post #21
PebblesHD wrote: post #6

It’s a similar story in Australia, leaving me constantly wondering what exactly CPI or inflation is supposed to measure. Cost of housing, both rented and especially to buy, are up astronomically, food costs about the same but packages are getting smaller, transport costs are increasing, yet the reporting from our central banks is saying all is well and inflation is low. Even if the purpose of their measurement is not…

>, yet the reporting from our central banks is saying all is well and inflation is low. Low inflation is a catastrophe. I'm surprised you don't know that much. No, things aren't well.

>> Low inflation is a catastrophe. I'm surprised you don't know that much.

I am surprised that you did not bother to explain what you mean by this.

Re: What used cars tell us about the risk of too much inflation hitting the economy

#27

Post by tanseydavid »

perl4ever wrote: post #20
another_comment wrote: post #9

Earlier quoted context omitted.

>> I think it might be time to define a new metric that more closely reflects the actual cost of living. We had different inflation stats back in the day. The US government has been slowly changing them. This guy uses the old official methodology to calculate inflation today. He gets way higher inflation using the old methodology and plugging in todays numbers. https://en.wikipedia.org/wiki/Shadowstats.com There is a…

>I think inflation is definitely higher than reported. I don't, and it's pretty straightforward why. You can argue about how high inflation was over the past year and about technical details. But if you think it's significantly and systematically off and has been for a long time, then it would compound and make a big difference. Back when my sense of "normal" prices was established, a pound of spaghetti was a dollar.…

>> "Shadowstats has not changed its $175 per year subscription fee since at least 2006"

>> If there's so much inflation, how come the price of reading about it hasn't gone up?

This is unserious analysis.

You were making a decent point up until you resorted to this type of rhetoric.

Re: What used cars tell us about the risk of too much inflation hitting the economy

#28

Post by tanseydavid »

imtringued wrote: post #22
seibelj wrote: post #2

My grocery bill is up 40% from pre-pandemic and I shop at the cheap grocery store. I buy basically the same stuff as I have for the past 10 years. Yet the government claims inflation is minimal. Combined with the value of my property rising and my 401k, I refuse to believe inflation is what the government claims. Huge scam going on here. The government has no incentive to say CPI is rising because that would require…

If the inflation was really as high as you said then deficit spending wouldn't be necessary at all.

>> If the inflation was really as high as you said then deficit spending wouldn't be necessary at all.

Can you please elaborate on what you mean by this?

Re: What used cars tell us about the risk of too much inflation hitting the economy

#29

Post by perl4ever »

tanseydavid wrote: post #27
perl4ever wrote: post #20

Earlier quoted context omitted.

>I think inflation is definitely higher than reported. I don't, and it's pretty straightforward why. You can argue about how high inflation was over the past year and about technical details. But if you think it's significantly and systematically off and has been for a long time, then it would compound and make a big difference. Back when my sense of "normal" prices was established, a pound of spaghetti was a dollar.…

>> "Shadowstats has not changed its $175 per year subscription fee since at least 2006" >> If there's so much inflation, how come the price of reading about it hasn't gone up? This is unserious analysis. You were making a decent point up until you resorted to this type of rhetoric.

It's half-serious, I don't call it analysis; I think it's weak but genuine evidence. It was meant to be a Parthian shot; the rest of my comments don't hinge on it.

Re: What used cars tell us about the risk of too much inflation hitting the economy

#30

Post by perl4ever »

credit_guy wrote: post #16
perl4ever wrote: post #15

Earlier quoted context omitted.

I don't want to encourage any conspiracy theories, but on the topic of incentives, there are a few at a higher level than the government employees you're thinking of. One is that a number of governments, including the US, UK, Canada, and Australia, issue bonds linked to inflation. That is, as I understand it, they return a fixed amount over the measured inflation from some index. In other words, understating inflatio…

> people at or near the top who may have incentives to distort things But who are those people? The Chairman of the Fed? The Secretary of the Treasury? The President? Let's say the US Government ends up paying $10 BN more on the inflation-linked bonds because of the CPI, how exactly will any of the 3 top-level people listed above going to suffer? Maybe the President does not get re-elected if the deficit is too high?…

I wouldn't know. If you asked me years ago why would anyone cook LIBOR, I wouldn't have known why or how. But such things happen. I think there is precedent for government figures on inflation being unreliable, (Argentina maybe?) so if you insist "it can't happen here" (in the USA) then it could be hubris, the assumption the US is just better than other countries.

When organizational failures happen, they don't happen with full transparency or with the participation of everyone in a large organization as if it were one big pyramid. Some people compromise with their conscience, but many others are just trying to balance doing their job as they see it with keeping their manager happy. The dynamics of sub-organizations depend on their directors and how much autonomy they have.

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