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Why the government took home prices out of its main inflation index

fullstackeconomics.com

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Re: Why the government took home prices out of its main inflation index

#311

Post by credit_guy »

cudgy wrote: post #300
credit_guy wrote: post #290

Earlier quoted context omitted.

I don't agree with your way of thinking. I know it's extraordinarily popular, but I think there is a different, more productive way to think about this. Think of houses sold to outsiders as a form of export. It's the best form of export: the good you are selling does not leave the premises, and the local community continues to collect taxes on that. The outsider does not consume government services as much as a local…

So your approach is to maximize tax revenue for the inefficient governments to hopefully use for some purpose? Seems very ineffective to have loads of empty houses. What other purpose should a residential home serve than to house people that need housing? The trend toward homes being investment and stores of value for the wealthy is contrary to the goals of building healthy communities that are not filled with ghost…

If you remove the artificial constraints on supply, then house prices will go down, and people will stop considering houses as an investment.

The price of a house should go down in time, just like the price of a car goes down in time. Or the price of any other good.

Re: Why the government took home prices out of its main inflation index

#312

Post by imtringued »

antisthenes wrote: post #253
jjoonathan wrote: post #218

Earlier quoted context omitted.

They want their children to rule in hell rather than serve in heaven. Not the wisest deal ever struck.

Well, if we're doing pseudo-philosophical soundbites, then hell is other people . Better to rule than be ruled. At the very least it gives you a bigger safety net when you fall out of power.

That is how you get in the mess in the first place. You are scared of being ruled by other people who are scared of being ruled by you.

A true acracy, i.e. a classless society, is never even considered.

Re: Why the government took home prices out of its main inflation index

#313

Post by imtringued »

faangiq wrote: post #68
recursivedoubts wrote: post #20

https://www.longtermtrends.net/home-price-median-annual-inco... nb that there is little relation to interest rates, which have been steadily declining since 82: https://www.freddiemac.com/pmms with the recent spike, we are currently at ~2000 interest rates, when homes were at 4x incomes, rather than 7+x home prices have been absolutely bonkers, with two massive bubbles (we are in one right now) and the fact that this…

This was all part of the plan to build a nation of mindless debt slaves. It was very effective.

When you save money and never spend it, someone must remain a debt slave until you have spent your money. From a macroeconomic and historic perspective this has never happened which is why it is necessary to have inflation erode debts as otherwise people would be eternal debt slaves.

Re: Why the government took home prices out of its main inflation index

#314

Post by imtringued »

BlargMcLarg wrote: post #246
lordnacho wrote: post #194

Earlier quoted context omitted.

The young men -> instability theory is one I've heard several times. It makes sense, but is there evidence or some sort of seminal article about it?

In GP's context, no. The basics of the theory is a lack of incentives for young men to play the game, which leads to either proactive destruction or passive destruction. War usually leads to a surplus of women and a lack of male competition in any other area (jobs, land, wealth, opportunity), incentivizing men to play according to the social contract rather than being violent or giving up. In fact, some would say sta…

Young men are excess capital and excess capital must be destroyed in capitalism. The interest rate on money is guaranteed to be zero, the capital yield of an employed human is negative if the yield of the capital they produce is negative, i.e. unsold products that spoil over time. Thus we fire them, to avoid the negative yield of labor and instead hold onto zero yielding money. The unemployed still need to eat, so they bypass the division of labor and just take what they need. To avoid this cost, you must starve them to death or outright kill them.

A rebellion is an act to pass the negative yield of labor back to the owners of financial capital and land but all at once instead of slowly each year.

To prevent rebellions, the government subsidizes the owners of financial capital and land by paying welfare, a bribe to make the abandoned behave by making them navigate bureaucracy and blame them instead of the original cause of their dependency on the bureaucracy. This is a subsidy, because the cost is not actually paid by the owners of financial capital but by the portion of the working class that is employed so that they hate the recipients of their taxes instead of the owners of financial capital and land that that created and benefited from the class of artificially helpless people.

Re: Why the government took home prices out of its main inflation index

#315

Post by imtringued »

coding123 wrote: post #211
bombcar wrote: post #181

Earlier quoted context omitted.

People define "rural" vastly differently - most "rural" areas in the USA are actually peppered with small towns (between 10 and 10k residents) which can be covered by high speed internet and even effective public transportation if desired - in a small enough town that can just be a guy with a van hired by the township. All you're really missing then is the connection to the nearest urban center - if it takes an hour…

Rural for me is 10 acre plots - can't see your neighbor too much. Rural for others is 40 acre plots. For some it's 400-1000.

That is illogical. In Germany rural means a town surrounded by hundreds or thousands of hectares. What you mean is just a special kind of suburbia.

Having your houses this far apart will result in extremely high infrastructure costs.

Re: Why the government took home prices out of its main inflation index

#316

Post by imtringued »

jandrese wrote: post #223
mupuff1234 wrote: post #188

Earlier quoted context omitted.

The population hasn't increased much (or maybe at all) in the last 2 years yet prices have sky rocketed - why is that?

Capitalism. The government has completely failed its job of monetary policy, which in broad strokes is to provide back pressure on capitalism's natural tendency to have money move upward. Today there is way too much money at the top and it has nowhere to go. The economy is less and less resembling a healthy marketplace and more medieval feudalism, with lords stuck in their opulent castles while the peasants farm dirt…

Pretty much. When money consolidates at the top, you effectively get a centrally planned economy. The problem though isn't fiscal policy which is a bandaid for an underlying problem. The rich don't spend their money, they endlessly reinvest it to grow their share of the economy until they have become such a large parasite that the host economy collapses, which is why politicians are constantly trying to grow the economy faster that the parasite can suck it dry.

Re: Why the government took home prices out of its main inflation index

#317

Post by imtringued »

ClumsyPilot wrote: post #267
nradov wrote: post #220

Earlier quoted context omitted.

Renting a home is in no way comparable to slavery. Your comment is offensive, inflammatory, and off topic.

I think you are misunderstanding my argument - the statement is not 'renting is like slavery' The argument put forward previously was 'people were starting families without X, therefore people not having X isn't a problem', where X was a house. I was trying to demonstrate that no matter what you substitute for X, even something extreme like basic human rights, people were still starting families, therefore either we…

You're saying people that decided that only a subset of the people that want to live there should live there are angry that they got to be excluded by their own favoured policy? They are plain hypocrites.

Re: Why the government took home prices out of its main inflation index

#318

Post by imtringued »

lumost wrote: post #67
sokoloff wrote: post #9

Earlier quoted context omitted.

I think the “new” (now 39 years old) method is superior overall, but I think it’s entirely factually correct that they took home prices out of the index. They did not take housing expenses out, which is what many people whose sole exposure to economics is via memes seem to think/be encouraged to think.

I think the methodological flaw here is the assumption that nominal housing prices are elastic . Housing expenses fell over the last ~30 years as interest rates fell, however it's highly unlikely that the reverse will hold true to the same tune. If interest rates go to 10%, people will stop trading housing rather than take a nominal hit and be under water on a mortgage. This means that as interest rates rise, housing…

What people don't seem to understand is that the interest rate doesn't really change your monthly payment in aggregate for housing as you are competing with other people on the monthly payment who get roughly the same interest rate. If the interest rate goes up, more of your monthly payment goes to the bank and less to the existing homeowner. This is only beneficial if you can buy a house outright with cash i.e. the rich get to buy the dip.

Re: Why the government took home prices out of its main inflation index

#319

Post by imtringued »

jjoonathan wrote: post #23
staticman2 wrote: post #16

Earlier quoted context omitted.

No it hasn't. The numbers on that site are fiction.

They look like adding a constant to the official numbers, lol. There is plenty of genuine spirited debate to be had over the basket of goods. There is room for using one indicator over another for any given application. Even against that backdrop shadowstats is clearly just a grift.

Adding a constant to exponential growth is absurd. Each 1% increase is more potent than the next.

Re: Why the government took home prices out of its main inflation index

#320

Post by imtringued »

cjmb wrote: post #229
throw0101a wrote: post #183

Earlier quoted context omitted.

> Thus central banks cannot control inflation in a global market. Japan enters the chat https://fred.stlouisfed.org/series/FPCPITOTLZGJPN

This is actually a picture of national failure, tantamount to celebrating a blowout losing scoreboard. It is not a model for others to copy. Productivity and inflation are very related to each other. Per your chart, "Japan enters the chat" in the mid 1980s. If you're curious what has happened to Japan since the mid 1980s you can read https://en.wikipedia.org/wiki/Lost_Decades (this wikipage was pluralized from "Decad…

Central banks are just actors dressed up in fancy credentials. They are ultimately meaningless institutions. Yes they control the interest rate and they can do QE but the commercial banks and federal government wield at least ten times more power in economics alone.
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