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Summers: Inflation Reached 18% in 2022 Using the Government's Previous Formula

forbes.com

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Re: Summers: Inflation Reached 18% in 2022 Using the Government's Previous Formula

#331

Post by leereeves »

robocat wrote: post #305
caseysoftware wrote: post #188

Earlier quoted context omitted.

> "The only way seems to be interest rates on personal loans and mortgages." Yes, exactly. As noted in the article and the underlying study, 80% of car purchases are done via a loan and financing is not part of the inflation measure. When you look at buying a home, most are also done via loans and still financing is not part of the measure. In both cases, interest rates are a factor in affordability and cost. > Blind…

> interest rates are a factor in affordability and cost Paradoxically over a long term, interest rates don't affect house affordability much. People bid on houses at the limit of what they can spend - the constraint is their income not the interest rate. As interest rates fall, people pay the same interest payments but bid higher on the house price (driving house prices up). As interest rates rise, people spend the s…

That doesn't seem to be true now. Home prices have risen despite higher interest rates.

Re: Summers: Inflation Reached 18% in 2022 Using the Government's Previous Formula

#332

Post by rafaelero »

zarzavat wrote: post #317
ta1243 wrote: post #293

Earlier quoted context omitted.

Far more divorced now too, so more demand on housing, and more people want to live in cities than in the 1960s, leading to even more demand. It all comes down to the cost of housing, at least in the UK where housing has been ridiculous for over 20 years. That housing is driven up to soak all available income by artificially constrained supply. All available income has increased on a household basis because of egalita…

We’ve replaced a world in which women are forced to stay at home with a world where women are forced to work until 70 (or whatever the retirement age is in your country). Great if you’re an exec or have some mentally stimulating job, but for the typical woman it means stacking shelves until your back gives out. What an achievement for society.

That's what equality means and what they fought for.

Re: Summers: Inflation Reached 18% in 2022 Using the Government's Previous Formula

#333

Post by akaru »

stormfather wrote: post #330
vineyardmike wrote: post #177

Earlier quoted context omitted.

> houses are unquestionably more valuable today… They also have better insulation and construction, they’re all wired for electricity and plumbing, they all have advanced HVAC. Fancier kitchens with more plumbing, appliances and nicer materials. People have access to more furniture and fixtures and appliances to fill more home - no one needed laundry rooms before a washer/drier was invented. Few had garages. Don’t le…

Show me a company that can sell a less advanced 1960s style house for the average worker's median income and I'll show you the next 100-billion dollar company.

Exactly. Why are there so many people trying to talk themselves into a corner?

Re: Summers: Inflation Reached 18% in 2022 Using the Government's Previous Formula

#334

Post by Teever »

Majromax wrote: post #321
TeMPOraL wrote: post #269

Earlier quoted context omitted.

That's missing forest for the trees. The more important part is that average 3.7 people household was a single-income one . I would rather disagree with GP's: > My point is that inflation isn’t abstract and it isn’t a law of nature. It’s a deliberate approach to stealing your prosperity while you cheer it on. A lot of the inflation, including how suddenly a single-income household isn't a viable option for most peopl…

> That's missing forest for the trees. The more important part is that average 3.7 people household was a single-income one. That's not necessarily true. Per FRED ( https://fred.stlouisfed.org/series/LRAC25FEUSM156S ), in 1963 about 44% of women aged 25-55 were in the workforce. That's obviously much lower than the ≈96% rate for men, but it implies that the average couple had closer to 1.4 incomes. The comparable rat…

What's the definition of 'in the work force'

Is a child with a paper route 'in the work force?'

Re: Summers: Inflation Reached 18% in 2022 Using the Government's Previous Formula

#335

Post by rafaelero »

esoterica wrote: post #290
tonymet wrote: post #106

Earlier quoted context omitted.

Pick whatever word you like if "inflation" is reserved for economists because regular people are "just too dumb to understand". We need a concept for debasement / hidden tax that allows people to hold their policymakers accountable. My point is that CPI isn't it, it underestimates true inflation by 3-5x or more , and it interferes with good governance. If the govt wants money from the people, they need to tax them an…

You are completely mathematically illiterate if you think that annual inflation is 3-5 times higher than the reported value. The average annual inflation since 1960 is 3.7%. If the real annual inflation were 3x that (11.1%) then we would have seen 85000% cumulative inflation since 1960. A gallon of gasoline cost $0.30 in 1960, so it would cost $250 in 2024 under 850x inflation. In reality a gallon of gas costs $3.60…

Computers got 99% cheaper, so by your analogy of only considering an arbitrary product, we have actually experienced deflation!

Re: Summers: Inflation Reached 18% in 2022 Using the Government's Previous Formula

#336

Post by hollerith »

fvvybfbfbyg wrote: post #328
tossandthrow wrote: post #297

Earlier quoted context omitted.

or the Scandinavian countries that generally have higher spending power than the us. remember not to conflate a strong economy with an economy that is worth living in. you can possess minimum paid jobs in order to make profits for shareholders and never see a dime of that wealth yourself, but alas, you live in a strong economy.

> or the Scandinavian countries that generally have higher spending power than the us. Do they? PPP they all have lower disposable income than the US and they are not even at the top in Europe (including social transfers). Germany, Switzerland, Austria and the Netherlands are above Norway and Sweden is even lower than France.

Also, Norway's PPP is as high as it is only because of North-Sea oil revenue.

Re: Summers: Inflation Reached 18% in 2022 Using the Government's Previous Formula

#337

Post by andy99 »

TeMPOraL wrote: post #269
woodruffw wrote: post #39

Earlier quoted context omitted.

> Remember in 1963 only the man was working, and typically supported 4 kids, a wife and often parents in the home. This is a ridiculous exaggeration: the average US household was 3.7 people in the 1960s, not over 6[1]. There are good reasons to hold politicians to task for recent abnormally high inflation. But this comment is more of an atavistic fever dream of the past than an expression of those reasons. Edit: anot…

That's missing forest for the trees. The more important part is that average 3.7 people household was a single-income one . I would rather disagree with GP's: > My point is that inflation isn’t abstract and it isn’t a law of nature. It’s a deliberate approach to stealing your prosperity while you cheer it on. A lot of the inflation, including how suddenly a single-income household isn't a viable option for most peopl…

When I worked a lot with government this used to be a big problem. Some minor tangential point in a finding would be slighty off or not adequately supported and people would jump on that, ignore the rest and pretend it invalidated the whole argument. It's mainly something that comes up talking to insecure bureaucrats that don't want to change.

Re: Summers: Inflation Reached 18% in 2022 Using the Government's Previous Formula

#338

Post by tossandthrow »

citizen_friend wrote: post #200
tossandthrow wrote: post #40

Earlier quoted context omitted.

The main thing is, that I could actually support a household of 6 people on a single income if I was allowed to fix the comfort at the 60s level. 1. No flying on vacation and only simple camping as vacation 2. No technology: Computers, phone, television. Nothing, and no associated costs with subscriptions, etc. 3. Eat like it was the 60s, mainly potatoes (I am from Northern Europe). That said: I truly believe in the…

No. Because the things that cost significant amounts of money aren't computers, phones, and tvs (notice that poor people have these). It's the minimum bar to be a player in society that has been raised. 1960s - could have a good career without college education and it was inexpensive - can afford a house - can often not have a car 2020s - need bachelors degree to get started, probably also need a professional degree…

What is it then, that is so super expensive today, that wasn't too expensive in the 60s?

also it is a strawman to mention the poor people has it. the hierarchy of what you spend money on is not settled in a hiatorical occurance of said product. you don't buy a watch before a phone because it was invented first.

also, it is completely irrelevant. my proposition is that if you fix your comforts at the 60s level then you have greater spending power than equivalent people of the 60s

Re: Summers: Inflation Reached 18% in 2022 Using the Government's Previous Formula

#339

Post by throw0101c »

542458 wrote: post #212
ein0p wrote: post #125

Earlier quoted context omitted.

CPI is designed to make the government look good, hence the article.

If the CPI was designed to make the government look good it wouldn’t use a modified Laspeyres index which introduces overestimation bias by assuming substitution does not happen between basket adjustments. It would be trivial to use a different index type which introduces the opposite bias, but they don’t.

> It would be trivial to use a different index type which introduces the opposite bias, but they don’t.

What would be an example(s) of this different type of index? Do you know of any (online?) resources that explain these differences about different types?

Re: Summers: Inflation Reached 18% in 2022 Using the Government's Previous Formula

#340

Post by gumby »

epicureanideal wrote: post #265
gumby wrote: post #164

Earlier quoted context omitted.

> Today Palo Alto, Menlo Park, and other super zips are exclusively [A slight exaggeration] $500k incomes and up. In the 1960 census records you will find these good neighborhoods occupied with plumbers, painters and other blue collar workers. This was unfortunately a deliberate consequence of the dot com boom, not something that happened in previous tech booms. Until around 2000 Palo Alto actually had a lower median…

Although what goes up can come down... if some other state or region within California permitted large amounts of construction, enabled businesses to move in, and threw a few hundred million at building a great university, property values here would drop a lot. With less intention and planning it will take longer, but could still happen, and there are some natural pressures pushing things in that direction.

If only. Palo Alto is one of the few cities fighting the state’s efforts in this regard. It’s really shameful.
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