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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

#111

Post by Phiwise_ »

worstspotgain wrote: post #89

Beware any election-year stories that just happen to elicit a deep sense of things being astray. Larry Summers in particular has a long track record of playing complex angles in his public policy views. The technical argument in the paper is totally separate from the headline here. The headline is what matters. You can think of macroeconomic policy as having been trained on economic history, probably more so than any…

>Beware any election-year stories that just happen to elicit a deep sense of things being astray. Larry Summers in particular has a long track record of playing complex angles in his public policy views. The technical argument in the paper is totally separate from the headline here. The headline is what matters. ... The null hypothesis is that the inflation wave came and went. You won't find a credible economist that can prove otherwise.

This is an almost deceptively bad characterization of Summers' data. Your comment implies Summers said inflation is still rising, when his proposed adjusted CPI also says inflation "came and went", as it is also just as far below its peak as the inflation of the official CPI is below its own. The difference is just that Summers' peaked later (plus higher, like the headline does mention) because of his inclusion of interest; while offical increase was declining his continued to rise just because during the increase of rates that increase offset the decrease in the increase of prices. Once rates stopped increasing this naturally also stopped, and his proposed inflation has been falling faster than official inflation did in order to close with it since [1].

Thus, no ultimate difference in failure to reject your null hypothesis.

[1] https://imageio.forbes.com/specials-images/imageserve/65fec8...

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

#112

Post by woodruffw »

tonymet wrote: post #108
abduhl wrote: post #102

Earlier quoted context omitted.

No, but the “typical” person isn’t old. Just like the “typical” man didn’t support 6 people in the 1960s.

[flagged]

These are the US Census Bureau's numbers. If you're going to contradict the US Census Bureau, then you're going to need to provide some actual sources here. Without that, this is low-effort trolling.

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

#113

Post by randomdata »

tonymet wrote: post #106
randomdata wrote: post #41

Earlier quoted context omitted.

> In other words you had 1 man working 50 hours a week afford a house... With inflation, we want to know about the change in value of the dollar only . We don't want to factor in the change in value of houses, food, etc. There is a place for understanding that too, but inflation is not it. Something like a cost of living index is more suitable to that kind of information. On that note, houses are unquestionably more…

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…

> Pick whatever word you like if "inflation" is reserved for economists because regular people are "just too dumb to understand".

Regular people understand inflation just fine. How useful it is to them is debatable, but it doesn't have to be for everyone. It's okay if some measurements are only useful to scientists and economists. The measure of the speed of light doesn't mean much in my day to day life either, but we don't have to abolish it because of that.

> We need a concept for debasement / hidden tax that allows people to hold their policymakers accountable.

I think what most people are looking for is simply cost of living measure. They want to know by how much the costs to live (housing, food, etc.) have increased over inflation. Which we have. But that one might actually be a case of being "too dumb to understand", explaining why it is not commonly put to use. Inflation is, indeed, a much simpler concept. Or it may be that the ultimate cost of living measurement comes from one's own personal accounting records[1], negating the need to reach for any 'universal' perspective.

[1] But I suspect most people don't keep any accounting records, so most likely the first one.

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

#114

Post by tonymet »

woodruffw wrote: post #107
tonymet wrote: post #95

Earlier quoted context omitted.

the average lifespan in the middle ages was 35 too. does that mean there were no old people?

Your comment explicitly mentions averages. It's a matter of basic fact that the average working-age male in 1963 was not supporting 5 other people with his salary.

They are not census statistics they are an amateur assembling statistics using public census data. The methods are not published

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

#115

Post by woodruffw »

abeppu wrote: post #96
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…

> True inflation would measure the amount of prosperity achieved per hour worked. I think this isn't a measure of inflation per se, because productivity changes are big over the decades. But I do think looking at costs in terms of hours of work is really helpful. I think back to an event in some HS extracurricular when a group of students got to ask questions of a gubernatorial candidate, and one kid asked if he was…

I agree with the point about the cost of education.

In real terms, however, the cost of a tank of gas is about what it was in the 1960s[1]. Today's average is $3.63[2], which is about $0.34 in 1960 dollars.

[1]: https://www.creditdonkey.com/gas-price-history.html

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

#116

Post by worstspotgain »

Phiwise_ wrote: post #111
worstspotgain wrote: post #89

Beware any election-year stories that just happen to elicit a deep sense of things being astray. Larry Summers in particular has a long track record of playing complex angles in his public policy views. The technical argument in the paper is totally separate from the headline here. The headline is what matters. You can think of macroeconomic policy as having been trained on economic history, probably more so than any…

>Beware any election-year stories that just happen to elicit a deep sense of things being astray. Larry Summers in particular has a long track record of playing complex angles in his public policy views. The technical argument in the paper is totally separate from the headline here. The headline is what matters. ... The null hypothesis is that the inflation wave came and went. You won't find a credible economist that…

I didn't characterize his data or the technical argument in the paper at all. I characterized the disingenuous headline, and emphasized the distinction.

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

#117

Post by tonymet »

hklijlyh wrote: post #63
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…

[flagged]

Food , services, insurance , construction costs, healthcare costs, property taxes , materials , fuel , energy

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

#118

Post by zarathustreal »

jeffbee wrote: post #35
ein0p wrote: post #32

That seems subjectively accurate, looking at my grocery store receipts and $13/lb meat. Certainly more accurate than “3.5%” bullshit the “free press” is asking us to believe.

If you have fancy meat tastes, that's on you. https://www.ers.usda.gov/webdocs/DataFiles/52160/cuts.xls?v=...

You’re oddly quick to jump into every thread to tell people they’re wrong about this, care to share your motivation?

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

#119

Post by woodruffw »

tonymet wrote: post #114
woodruffw wrote: post #107

Earlier quoted context omitted.

Your comment explicitly mentions averages. It's a matter of basic fact that the average working-age male in 1963 was not supporting 5 other people with his salary.

They are not census statistics they are an amateur assembling statistics using public census data. The methods are not published

The method is listed in the description below the statistics. Again: if you think these numbers are suspect, you are encouraged to find a different citation that contradicts them. Without that, your complaints are unsubstantiated.

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

#120

Post by Phiwise_ »

jeffbee wrote: post #34
slibhb wrote: post #4

It's interesting that consumer sentiment apparently tracks the older formula more closely. Presumably we have data that could allow us to include "the price of money" in inflation metrics, perhaps weighed based on how much the average American borrows.

Headline consumer sentiment is polluted by junk like this article. People report their personal household situation is fine and they expect it to continue being at least this good or better in 1 and 5 years. But they've heard so much shadowstats horseshit on the radio that they are compelled to stake out a negative view on the economy as a whole. In the latest UMich consumer survey majority of respondents expect thei…

>But, further down the February results, you can see that record numbers of people report hearing negative news stories about prices, way way way higher than in 1980! Which is totally crazy if you were here in 1980!

If you had taken a moment to consider the data presented in the article instead of dismissing it out of hand because it offends your sensibilities, you would realize it states that it obviously implies it is not crazy to hear more news about inflation nowadays than in the 1980s, because it shows inflation is worse nowadays than in the 1980s. Feel free keep raving about how you get a much better vibe from the economy today despite the info if that's what matters more to you, though.

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