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US Consumer Price Index up 4.2%

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Re: US Consumer Price Index up 4.2%

#171

Post by jfyi »

PierceJoy wrote: post #91
VirusNewbie wrote: post #54

Earlier quoted context omitted.

This is why it's important to get paid in stock. I get an automatic extra 100k a year if inflation runs hot!

If inflation due to energy costs is running hot they’ll have to raise rates which will cause stock prices to fall.

We are bottlenecked at energy supply, not running hot via demand. Raising rates is likely to stifle already weak sections of the economy. Additionally, we are getting into territory where raising rates threatens our own ability to pay our debt.

Just to be clear, I am not coming at this from some anti-interventionist or anti-monetary tool standpoint. It's just that demand side tools seem like the wrong lever for the job. We are backing slowly into the corner of persistent inflation or structural failure of some kind.

Re: US Consumer Price Index up 4.2%

#172

Post by asdff »

Salgat wrote: post #153
dw_arthur wrote: post #93

Paradoxically, inflation has contributed to me taking a sabbatical. While I live in a LCOL area and made ~140k/year it just no longer felt worth it to work as I saw my retirement accounts start to match and exceed my salary in yearly gains. I do plan on going back to work in a part time manner, but inflation has killed any reason for me to work hard at a job for that level of salary. Furthermore, the feeling of "what…

You're still cutting your annual income in half though. That's pretty big no?

LCOL a good house might be 140k outright. Their costs are probably barely anything yearly against their returns.

Re: US Consumer Price Index up 4.2%

#173

Post by HDThoreaun »

dmoy wrote: post #152
HDThoreaun wrote: post #113

Earlier quoted context omitted.

Why is that not good? When inflation is close to 0 real interest rates increase which causes the economy to slow down. It seems clear to me that the optimal rate of inflation is always above 0.

The real problem imo is that below 0% is really bad, and has the potential to spiral. So the fed does not target anything close to 0%, but instead targets some buffer above it. So it's not that "2% is good", but more that "2% is the best buffer we've decided above the <0% super scary threshold"

Yes of course below 0% is especially bad, but I dont think thats the whole story. If central banks were able to set inflation with 100% certainty I still think targeting a number close to 0% is a bad idea. Nominal interest rates have a floor due to defaults, servicing costs. As inflation approaches 0 that floor is hit and monetary policy loses its ability to control real interest rates. Keeping nominal rates above their floor is key to ensuring small business can obtain liquidity, as the floor is approached it makes less sense for lenders to write small loans.

There are many other reasons a positive inflation rate is better than substantially near 0. One common complaint about inflation is that erodes real wages because nominal wages are sticky, but this is actually a good thing. It gives businesses room to breathe during downturns without cutting nominal wages or having to cut staff. Positive inflation also forces cash into productive uses which helps monetary policy because it keeps the actaul money supply more stable.

Re: US Consumer Price Index up 4.2%

#174

Post by Dylan16807 »

win311fwg wrote: post #169
Dylan16807 wrote: post #166

Earlier quoted context omitted.

It's using a fixed value of goods and measuring the price of that basket to measure the value of a dollar. The price of a dollar is one dollar. That's a useless statistic.

> It's using a fixed value of goods The CPI basket is definitely not fixed. It is constantly evolving to ensure that the metric is useful. Consumption habits are not fixed. > The price of a dollar is one dollar. Technically true, just like the price of one iPhone is the price of one iPhone (assuming equivalent specs), but in the real world price is used to compare the value of different things. Currently, the price o…

The basket shifts but it's trying to stay equivalent. Not in dollar terms but in benefit terms. If it's not trying to have a stable value then it's not a useful measuring stick.

Re: US Consumer Price Index up 4.2%

#175

Post by jmull »

AnimalMuppet wrote: post #32
ortusdux wrote: post #23

The worst part of this report is my diminished faith in the numbers.

Could you explain? What about this report pushes you toward not believing the numbers?

The current administration fires people leading BLS when it reports numbers they don't like, regardless of the merit of the numbers.

Re: US Consumer Price Index up 4.2%

#176

Post by bluecalm »

Salgat wrote: post #153
dw_arthur wrote: post #93

Paradoxically, inflation has contributed to me taking a sabbatical. While I live in a LCOL area and made ~140k/year it just no longer felt worth it to work as I saw my retirement accounts start to match and exceed my salary in yearly gains. I do plan on going back to work in a part time manner, but inflation has killed any reason for me to work hard at a job for that level of salary. Furthermore, the feeling of "what…

You're still cutting your annual income in half though. That's pretty big no?

The thing is at some point there is very little to gain. Once you have a nice place to live and don't need to sweat over daily expenses there isn't much that significantly improves life quality other than just having more time (that is working less) for yourself and your family.

Add high taxes to this and working is even less attractive when they take 50% from you. No wonder many highly qualified people decide to pass on that deal and just do the bare minimum which in OP case is nothing.

Re: US Consumer Price Index up 4.2%

#177

Post by asdff »

khuey wrote: post #110
madcaptenor wrote: post #74

Earlier quoted context omitted.

Tax brackets are also inflation-adjusted, so shouldn't that cancel out?

Most of the relevant numbers in the American tax code are inflation adjusted, but not all of them. The biggest ones for people on this website are probably the value of the Child Tax Credit and the thresholds at which the Net Investment Income Tax/Additional Medicare Tax kick in.

Don't forget prop 13 in california, probably many beneficiaries of that policy on this forum.

Re: US Consumer Price Index up 4.2%

#178

Post by dw_arthur »

rottencupcakes wrote: post #123
ZeWaka wrote: post #103

Earlier quoted context omitted.

Are you assuming yearly wages not increasing to match/exceed inflation every year? The logical point here doesn't make much sense to me otherwise.

Also is having twice as much money (1x from interest and 1x from income) not a benefit? Maybe you are the strawman consumer that skeptics point to in guaranteed basic income debates, who just stops working because they get a check.

The only thing I want to spend a bunch of extra money on is a nice property and making twice the money would not get me there in what I consider a reasonable amount of time. I'm also not interested in going on an extra two fancy vacations per year or a nicer car. I'm plenty content to read, cook, learn, and enjoy the arts.

Re: US Consumer Price Index up 4.2%

#179

Post by NewJazz »

mrtksn wrote: post #35
bluGill wrote: post #7

Remember this next time you get your yearly review/raise. 4.2% is what you need to stay even, anything less is a pay cut.

It means you already had the paycut, you need to have at least %4.2 rise + reimbursement to make even. In high inflation countries you often get a revision every 2-3 months and you get a rise that is higher than the official inflation, as a result this solidifies the inflation and boosts the economy as everyone immediately buys whatever they can before it becomes more expensive. It's a vicious cycle.

You and your employer should consider future expected inflation at the time of negotiation. You don't need a true up in that case to "break even!.

Re: US Consumer Price Index up 4.2%

#180

Post by madcaptenor »

kennywinker wrote: post #132
nothercastle wrote: post #105

Earlier quoted context omitted.

No it pushes you into a higher tax bracket earlier so also acts as a tax increase

I think the point is the tax brackets are supposed to be inflation-adjusted. So all the brackets go up 4.2% too. Idk if the implementation details make this actually work out 1:1 but that’s the idea.

That's what I was thinking.
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