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

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

#401

Post by wakawaka28 »

tootie wrote: post #381
wakawaka28 wrote: post #228

Earlier quoted context omitted.

>People tend to react to things they buy frequently which also happen to be the most volatile (food and fuel) and react less to things they actually spend most of their money on (shelter and transportation). Are you suggesting housing prices haven't gone up similar to food prices? Because they have. House prices in many places went up 50% in the last few years and never went back down. People aren't imagining this in…

I am not implying that. But house prices by their nature move more slowly. Even if new listing are more expensive, anyone in a long-term lease or an owner isn't subject to new prices. Or anyone who has exited the housing marker (ie moving in with parents) is not paying high prices.

>But house prices by their nature move more slowly.

They can and have moved very fast in the past few years.

>Even if new listing are more expensive, anyone in a long-term lease or an owner isn't subject to new prices. Or anyone who has exited the housing marker (ie moving in with parents) is not paying high prices.

That is a very short-term situation. Everyone who doesn't own a house needs to pay rent. And homeowners will eventually be faced with higher taxes as a result of inflated values, and they might not be able to cope. People who are forced to move in with parents aren't managing some epic life hack, they are trying to scrape by in the face of high prices.

It seems like you're trying to make the argument "There is no inflation and even if there is, it doesn't matter." And I'm not buying it.

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

#402

Post by wakawaka28 »

kasey_junk wrote: post #378
wakawaka28 wrote: post #356

Earlier quoted context omitted.

>At the same time the price of construction grade metal has come way down. Thus large beam construction has become a luxury. Have you ever seen an old 2x4? This isn't "large beam" but it's obviously higher-quality than new 2x4s. >As for housing quality, post war tract homes were wildly worse. My wifes family still owns the tract home they lived in growing up. It was exposed concrete, exposed roof and no ductwork unti…

> Have you ever seen an old 2x4? This isn't "large beam" but it's obviously higher-quality than new 2x4s. The 2x4 was decreased in size below 2x4 in the 1920s because shipping costs started dominating lumber prices because we’d depleted the forests near the cities where demand was greatest. It was further reduced during the second world war because building of necessity became standardized and again shipping volume w…

>The US forest labs did tons of tests on this in the 1920s fwiw proving there was no quality difference.

Lol if you see old 2x4s and new 2x4s first-hand you'll know immediately that this is wrong.

>Now there are many fine homes left from prior to these changes, but there are many many more crap homes that are gone because they weren’t capable of lasting. These are the homes you should be comparing to the average home built today.

In many cases perfectly salvageable homes were demolished to make room for new stuff. Don't forget about those.

>I am certainly not an expert on housing but my father was professionally and I did help my grandfather add an addition to our family farm house that was from the 1910s, when it was literally 1 room without plumbing (they’d done a previous remodel in the 60s to add bedrooms and plumbing, the materials from that remodel were not significantly different than the materials we used in the 90s).

There is a high degree of variance in the quality of old construction, I have to admit. But from what I've seen, prior to the 70s (and maybe even later) even simple homes were built with materials that would be considered premium today. Hardwood floors, solid wood walls, tongue-in-groove planks everywhere. If it's a brick house, it's actual solid brick instead of a brick facade on cheap trash wood. Very rare to see drywall or plywood, or the other flimsy materials people use now. Even old plywood is premium compared to the new composite crap all glued together.

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

#403

Post by leereeves »

robocat wrote: post #400
leereeves wrote: post #331

Earlier quoted context omitted.

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

That is irrelevant to what I wrote. If interest rates remain the same for a longer period then houses must sell for a price where people can pay their mortgages. Household income is a hard constraint. People can't pay more for interest payments than they earn. House prices can still rise if: • people can pay more on interest e.g. reduce their spending in other areas e.g. increase income using overtime. e.g. rent or A…

> If interest rates remain the same for a longer period then houses must sell for a price where people can pay their mortgages.

No, houses can stay expensive even if no one lives in them, as we see in China.

Or rents can rise far above affordable levels, as they have, and people can end up paying more in rent than they could qualify for with a mortgage.

Or people can take roommates or boarders to afford the higher costs.

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

#404

Post by tootie »

wakawaka28 wrote: post #401
tootie wrote: post #381

Earlier quoted context omitted.

I am not implying that. But house prices by their nature move more slowly. Even if new listing are more expensive, anyone in a long-term lease or an owner isn't subject to new prices. Or anyone who has exited the housing marker (ie moving in with parents) is not paying high prices.

>But house prices by their nature move more slowly. They can and have moved very fast in the past few years. >Even if new listing are more expensive, anyone in a long-term lease or an owner isn't subject to new prices. Or anyone who has exited the housing marker (ie moving in with parents) is not paying high prices. That is a very short-term situation. Everyone who doesn't own a house needs to pay rent. And homeowner…

I am not making that argument at all. I'm explaining why the numbers are the numbers. And why the numbers don't capture how people perceive things. I should clarify that I mean the "prices people pay for housing move slowly" even if they prices of available housing move quickly for the reasons I mentioned above. And I don't think exiting the housing market is a life hack, I'm just saying it's happening. It's the kind of thing that would explicitly not be reflected in inflation indicators because no price is being paid but would be felt as a negative effect of inflation by people experiencing it.

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

#405

Post by exe34 »

lupire wrote: post #374
exe34 wrote: post #310

Earlier quoted context omitted.

It's not the market that's eating the "surplus". Economic inequality is at an all time high. Big corporations are posting record-busting profits. Inflation is driven by greedflation, mostly.

Corporations aren't natural persons. You have to look a the in/equity of the wealth of the people who enjoy the corporation's money.

Did you think I was claiming the corporations themselves were hoarding the wealth? Did it not occur to you that I was referring to the corporations as the tools of the shareholders? Do I really have to be that explicit and include misquotation alerts for every possible idiot?

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

#406

Post by s1artibartfast »

starfleet_bop wrote: post #369
mrep wrote: post #359

Earlier quoted context omitted.

Your standard office worker probably refinanced their mortgage at ~3% and is now laughing their way to the bank as their debt inflates away so they probably are profiting from it. I know I am. Your standard retiree on the other hand who holds a lot of bonds that got absolutely hammered by inflation and rising interest rates is not doing so well.

That only works if you’re income rises faster than inflation, otherwise the relative amount of debt either remains the same or even increases.

Investment income absolutely has

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

#407

Post by Dylan16807 »

wakawaka28 wrote: post #399
Dylan16807 wrote: post #395

Earlier quoted context omitted.

> Your point was precisely that "gains" in the stock market make up for other downsides of inflation. Nah, just saying it can reduce the damage. > You have a very distorted idea of what is a "relatively average person"... Most people don't have money in the stock market (which I've already argued is not making up for inflation anyway). Most people don't own houses either. As much as I hate banks, lenders getting scre…

>Nah, just saying it can reduce the damage. Increased nominal value of assets doesn't reduce any damage actually. It just means that maybe you lost a smaller portion of your net worth than you would have otherwise. >It's not good for businesses, and the drop in real income is not good. But the income hurt is smaller than raw inflation, and the the savings situation is pretty nice actually. While some businesses may b…

> It just means that maybe you lost a smaller portion of your net worth than you would have otherwise.

Y-yes? That isn't reducing the damage to you?

> No, there is no profit from inflation. The numbers are just getting bigger. There is one actual way to profit from inflation, and that is to borrow money and buy valuable stuff, then repay the loan with less valuable dollars.

I didn't say the profit was from inflation.

If inflation is 30% percent, but your savings went up 60% since 4 years ago, then you profited overall. (And stocks would not have gone up the same amount if there was no inflation.)

Overall you're probably worse off than if inflation was lower, but you can't say that your money buys 30% less now.

Remember, I was specifically objecting to the idea that "inflation is X% in the last few years, therefore my money buys X% less". Ignoring that it's the wrong way to calculate percentages, the baseline idea is not true. The amount your wallet is impacted is more than 0, but less than inflation.

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

#408

Post by paulryanrogers »

rafaelero wrote: post #351
paulryanrogers wrote: post #346

Earlier quoted context omitted.

There is more at play than simply equal rights. Housing supply hasn't risen to keep up with demand. Education and healthcare costs too have grown significantly compared to pregnant-and-barefoot-in-the-kitchen eras.

I agree. But what does it have to do with your rant about women particularly getting a worse deal?

Not my rant. Regardless, my point is that one cannot say that the cost of equality must always or only be housing requiring dual income or shitty working life/hours.

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

#409

Post by robocat »

leereeves wrote: post #403
robocat wrote: post #400

Earlier quoted context omitted.

That is irrelevant to what I wrote. If interest rates remain the same for a longer period then houses must sell for a price where people can pay their mortgages. Household income is a hard constraint. People can't pay more for interest payments than they earn. House prices can still rise if: • people can pay more on interest e.g. reduce their spending in other areas e.g. increase income using overtime. e.g. rent or A…

> If interest rates remain the same for a longer period then houses must sell for a price where people can pay their mortgages. No, houses can stay expensive even if no one lives in them, as we see in China. Or rents can rise far above affordable levels, as they have, and people can end up paying more in rent than they could qualify for with a mortgage. Or people can take roommates or boarders to afford the higher co…

Irrelevant whether someone is living in it or not.

And I don't think China is a relevant example when discussing mortgages in my country or the US.

If the market is driven by mortgages (presuming there are not other reasons why the market is disfunctional) then someone is paying the mortgage (or the opportunity cost of investing cash).

The market price mostly depends on how much people are capable (and willing) to spend on interest payments. Somewhat different dynamics in New Zealand because to an approximation our mortgages are all variable so we see house prices shift over a couple of years as interest rate changes (plus our interest rates are often higher than US rates). US 30 year mortgages at a fixed rate mean market prices drop more slowly, but I'm guessing can still rise quickly. Interest rates went up in NZ and two years later property prices are down 10% currently I think (plus sentiment still really matters too).

You can still fiddle with terms and a bunch of other free variables, but interest payments are one of the most significant variables.

We had an earthquake in my city and uninsurable houses could not get mortgages and the price to buy one of those houses dropped drastically. https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...

> Or people can take roommates or boarders to afford the higher costs.

I agree with you so much that I already previously mentioned that ("rent or AirBnB rooms") in the comment you are replying to!

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

#410

Post by fasa99 »

IG_Semmelweiss wrote: post #357
tonymet wrote: post #16

I recommend people use many different indicators to get a mental model of inflation, and you will notice that CPI does not represent inflation well. The memes of Arby’s 5 for $5 becoming 4 for $10 are more informative than the CPI numbers. Don’t let the shock at the grocery store wear off – it’s real and painful despite what the news tells you. True inflation would measure the amount of prosperity achieved per hour w…

I'll add 1 more to the mix. Subway fares for NYC [1] - 2 fare increases in the first 60 years of operation. - 17 fare increases in the next 60 years. Note that even with the fare increases in the last 60 years, once adjusted for inflation, the cost of MTA fares were actually going down until 1984 or 40 years or so, when fares really exploded [2] [1] https://en.m.wikipedia.org/wiki/New_York_City_transit_fares [2] http…

All of this is very tricky stuff, I would just call it shades of grey and leave it at that, no black and white. Similar lore happened in the DC metro, everything was fine until it got to be XX years old and then they jacked up the prices and starting shutting things down all the time -- because the infrastucture was all getting dangerously old (subway fires and such) and so they had to quasi-build-new infrastucture, so that got a guy that basically said "we're gonna fix it and it will be painful but we will still fix it" for example - https://thehill.com/policy/transportation/291651-dc-metro-ex...

The crux of it is, it's generally easy to maintain a pretty new system than an aging one (bathtub curve type scenario like in the hard drives). As such we see China sitting real pretty presently but say 50 years from now it will inevitably be a different tune.

Now in the case of NYC I wouldn't be surprised if some of that had to do with crumbling, very very old infrastructure, and I wouldn't deny either by the same token it had to do with macro-economic factors as well, all shades of grey. First 60 years of operation NYC probably had a lot of "brand new" stuff at any given time.

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