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

Unemployment (U3) is an even worse indicator than CPI .

95% + of the recent employment rates have been part time employment.

U3 doesn't account for the historically low participation rate (about 60%)

They were complaining about being able to buy 30% less. I gave some reasons that isn't the case, that decreasing in spending power would be less than 30%.

I'm not saying anything "avoids" inflation, I'm saying they're exaggerating the problem.

And stop saying it doesn't matter. Those numbers being different values does matter.

A huge portion of your text is acting like it's a binary bad/not-bad, and then acting like I said it's not bad. I'm not saying that.

> Again, your money does not increase like this.

You don't have a significant amount of money. You have income, you have assets, you have debt.

Only the literal money changes 1:1 with inflation.

If you talk about what your "money" can buy when complaining about inflation, that's not literally the $500 in your checking account. It's not a complaint that you lost a few hundred dollars, one time, and nothing else changed. "money" in this sense is also talking about the bigger group of income and assets.

> You are getting awfully pedantic. We talk about inflation in terms of price hikes because that's something that affects everyone. Accounting for all the inflation avoidance schemes and possible wage increases that people get to cope with inflation would require a different statistic. Those coping mechanisms are a red herring when it comes to the actual performance of our currency, which is what people actually care about.

This comes so close to agreeing with me.

Yes, "different statistic". That's my fundamental argument. My entire point is that ein0p was conflating "inflation" with measurements of how much they can buy when those are different in a few important ways.

And by "schemes" I'm talking about a couple things that together affect the majority of people, not edge/corner cases.

Using accurate numbers is good mmmkay?

>I'm not saying anything "avoids" inflation, I'm saying they're exaggerating the problem.

I can see why you might think that, but the problem isn't that they're stating it wrong. If they had $1000 that now buys $700, that is literally 30% less. You're bringing a bunch of tangential factors into this to try to say that the problem isn't that bad, but it is.

>A huge portion of your text is acting like it's a binary bad/not-bad, and then acting like I said it's not bad. I'm not saying that.

Well, your intention is certainly a binary for/against this idea. You're being extremely pedantic and persistent about saying essentially "It's not as bad as you think". Well, it actually is as bad as I think, and I have been thinking about it almost daily for like 4 years now.

>If you talk about what your "money" can buy when complaining about inflation, that's not literally the $500 in your checking account. It's not a complaint that you lost a few hundred dollars, one time, and nothing else changed. "money" in this sense is also talking about the bigger group of income and assets.

You're wrong to count other things besides currency as money. Inflation stats are specifically about currency. Roping anything else into it is a red herring. So far you have done two things that are distracting from this:

1. Grouping other assets into "money" that may go up because of inflation itself, or because of other factors like risk or business operations. 2. Wage or benefit increases that may or may not come, and certainly aren't guaranteed.

>Yes, "different statistic". That's my fundamental argument. My entire point is that ein0p was conflating "inflation" with measurements of how much they can buy when those are different in a few important ways.

There are too many individual circumstances to account for to come up with a statistic like that, and at that point you're measuring properties of individuals and not the monetary system. Even CPI, which measures sampling of prices in many categories, is very complicated. It is also heavily manipulated IMO.

>And by "schemes" I'm talking about a couple things that together affect the majority of people, not edge/corner cases.

I think you might have good intentions but ultimately you're ignoring a number of circumstances that do affect most people differently, as I have pointed out. The only thing that applies universally to all people is prices, and even then prices in different categories affect different people differently. I think the sampling for CPI is supposed to represent the typical consumer already.

What is the goal of these "better" stats which dodge the root of the problem for a majority of people, if not to understate the harm of reckless monetary policy? I'm of the opinion that the statistic that you want is pointless and would also be harmfully misleading if it was created. It might be ok if buried in some report for economists, but it isn't relevant to most people.

Interest rates impact the cost of everything you buy.

Almost all large businesses are financing their operations on credit, not by spending down a war chest replenished with revenue. Large public companies borrow money against their remaining held stock to finance their operation. It is true that inflation impacts the base cost of the raw materials and labor but those costs are also more expensive because of the higher business loan interest rate to finance an operation. The extra financing cost is passed to the consumer.

The higher cost of financing drives layoffs too, companies will layoff when financing costs rise so they can stay cost neutral.

> Well, your intention is certainly a binary for/against this idea. You're being extremely pedantic and persistent about saying essentially "It's not as bad as you think". Well, it actually is as bad as I think, and I have been thinking about it almost daily for like 4 years now.

I'm not trying to minimize inflation. I'm saying that there are two numbers here that are not the same. If the impact was worse than the actual inflation number, I'd be saying that too.

Saying that two numbers are different is the exact opposite of reducing things to a binary. I'm arguing for a more complex analysis.

> You're wrong to count other things besides currency as money. Inflation stats are specifically about currency.

Please answer this question then:

Do you truly think the complaint I responded to was about the literal money that person held from 2020 until 2024, and nothing else? They weren't complaining about their income rising slower than inflation, their income was completely unrelated, they were only concerned with the loss from the exact amount of cash and bank balance they had during that time period? If inflation paused today, they were not complaining about any ongoing loss of purchase ability, just the one-time loss from the literal money they had?

If your answer is yes, then we've been talking past each other pretty badly.

But I really don't think that's what they meant. I think they were complaining about their own purchasing power in an overall sense.

> There are too many individual circumstances to account for to come up with a statistic like that

Has anyone tried? I think you could get some good graphs out of it. I agree that it shouldn't be reduced to a single percentage.

> What is the goal of these "better" stats which dodge the root of the problem for a majority of people

My only goal is to avoid overly simplistic numbers. And I don't see how what I'm saying "dodges the root of the problem". Inflation is still the primary factor!