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U.S. Inflation Accelerates to 40-Year High

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Re: U.S. Inflation Accelerates to 40-Year High

#221

Post by ask_b123 »

eldavido wrote: post #166
squidlogic wrote: post #131

Earlier quoted context omitted.

>asset prices don't matter to ordinary people. Can you provide some data on this assertion? I would be surprised to learn that the majority of ordinary people (assuming you mean something like 'net worth < $1MM USD') do not care about housing costs and car costs, which are both assets.

The median net worth in the United States is approximately zero (assets less student loans, mortgage debt, etc). The median 401k balance in the US is something like 100k. I'm probably right of many people here politically but will readily admit, there's a lot less wealth out there than you'd think, and what there is, is held by a pretty small number of people. Also, speaking broadly, I don't think the economics profe…

Where did you get the data on median net worth? I found this, https://en.wikipedia.org/wiki/List_of_countries_by_wealth_pe..., which states that the median U.S. net worth per adult is 79,274.

Following the references and links I ended up reading this: https://www.federalreserve.gov/publications/files/scf20.pdf, on the top of page 6 there is an interesting tidbit:

> One liability of using the median as a descriptive device is that medians are not additive—that is, the sum of the medians of two items for the same population is not generally equal to the median of the sum (for example, median assets minus median liabilities will generally not equal median net worth). In contrast, means for a common population are additive.

Re: U.S. Inflation Accelerates to 40-Year High

#222

Post by pwinnski »

bitshiftfaced wrote: post #202
teraflop wrote: post #49

As usual, take headlines about inflation with a grain of salt. Yes, the year-over-year inflation reached a new peak. But the month-over-month inflation rate has actually been declining since last October: https://www.bls.gov/news.release/cpi.nr0.htm So when organizations publish a new article every month saying inflation is "accelerating", they're being incredibly misleading.

Not that misleading. If you zoom out 5 years or more, you'll note increased slope of the CPI index over the past couple of years. https://fred.stlouisfed.org/series/CPIAUCSL It's fair to say that inflation has been at an accelerated rate over a time period that makes sense to most folks. Saying that it has decreased month-to-month is more misleading in my opinion. If you were to pick any random period in time, chance…

Most of the time, a month-to-month comparison might miss the forest for the trees. Except that in this case, the forest in question has just gone through a pandemic.

Re: U.S. Inflation Accelerates to 40-Year High

#223

Post by bko »

arcticbull wrote: post #187
bko wrote: post #186

Earlier quoted context omitted.

> Correlation != causation. People misuse correlation/causation expression so much I think its actually detrimental... If something coincides with something else nearly 100% of the time, I think its safe to say there's some relation between the two. And printing money is always prior to inflation. > It's currently 25.86. In 2020, it was 25. In 2018, it was 25. In 2009 it hit 123. In 2003, it was 32. In 2002 it was 46…

> If something coincides with something else nearly 100% of the time, I think its safe to say there's some relation between the two. And printing money is always prior to inflation. Not really no, which is why we have the whole correlation != causation thing. The number of people who drowned in a swimming pool perfectly correlates with power generated by US nuclear plants over 10 years. [1] There's obviously no causa…

> Not really no, which is why we have the whole correlation != causation thing. The number of people who drowned in a swimming pool perfectly correlates with power generated by US nuclear plants over 10 years

Not every encounter with a body of water results in drowning. But nearly every drowning involves a body of water. It's not about correlation. It's bayesian probability.

P(drowning|water) >> P(drowning)

P(lung cancer|smoking) >> P(lung cancer)

P(inflation|money printing) >> P(inflation)

Do you get it yet?

> The same is true here - you need a model to adequately explain otherwise you're just intuiting, and intuition is frequently wrong.

Pretty much any econ 101 book. Search basic economics in Amazon for sources

Re: U.S. Inflation Accelerates to 40-Year High

#224

Post by arcticbull »

bko wrote: post #223
arcticbull wrote: post #187

Earlier quoted context omitted.

> If something coincides with something else nearly 100% of the time, I think its safe to say there's some relation between the two. And printing money is always prior to inflation. Not really no, which is why we have the whole correlation != causation thing. The number of people who drowned in a swimming pool perfectly correlates with power generated by US nuclear plants over 10 years. [1] There's obviously no causa…

> Not really no, which is why we have the whole correlation != causation thing. The number of people who drowned in a swimming pool perfectly correlates with power generated by US nuclear plants over 10 years Not every encounter with a body of water results in drowning. But nearly every drowning involves a body of water. It's not about correlation. It's bayesian probability. P(drowning|water) >> P(drowning) P(lung ca…

> Pretty much any econ 101 book. Search basic economics in Amazon for sources

Only the Austrian ones, which are long since abandoned.

Re: U.S. Inflation Accelerates to 40-Year High

#225

Post by voisin »

chasd00 wrote: post #112
eldavido wrote: post #81

Earlier quoted context omitted.

Keep in mind "7.5%" is the aggregate across the entire basket. This isn't how individual people perceive inflation. What actually happens is that a few things make big jumps (10-15%) and the prices of other things don't increase as quickly. Maybe not the nicest thing to say, but I'm hardly affected by inflation at all. The four biggest categories to experience inflation recently have been used cars, petroleum, rents,…

i have a variable rate loan on 20 acres that's making me nervous. I'm going to start researching options to rolling that into a fixed rate somehow before the Fed does the inevitable.

It’s too late. Banks have already priced into fixed rates the expectation of rate increases. This is what the newspapers mean when they talk about “market expects 4 rate hikes in 2022” and similar. It is already priced into the yield curve by traders.

Re: U.S. Inflation Accelerates to 40-Year High

#226

Post by mvkel »

dominotw wrote: post #40
mvkel wrote: post #12

Earlier quoted context omitted.

Inventory is so low, it's extremely difficult to buy even if you wanted to

inventory is building back up at a rapid pace. I see lots of construction everywhere.

It depends on the area, of course, but most of the construction you're seeing is likely already purchased; developments sell well before the shovel hits the ground these days.

Re: U.S. Inflation Accelerates to 40-Year High

#227

Post by tagoregrtst »

voisin wrote: post #196
tagoregrtst wrote: post #189

Earlier quoted context omitted.

they paid more than double then what they bought it for. Interest at 11% over 30 years is larger than the principle.

Why not refinance when rates decline?

If they fall within the lifetime of the loan. 11% interest rates werent a one year thing.

That being said, I keep forgetting refinancing is one of the great American blessing we dont enjoy elsewhere. And Ive refinanced twice already :D

Re: U.S. Inflation Accelerates to 40-Year High

#228

Post by arcticbull »

bko wrote: post #223
arcticbull wrote: post #187

Earlier quoted context omitted.

> If something coincides with something else nearly 100% of the time, I think its safe to say there's some relation between the two. And printing money is always prior to inflation. Not really no, which is why we have the whole correlation != causation thing. The number of people who drowned in a swimming pool perfectly correlates with power generated by US nuclear plants over 10 years. [1] There's obviously no causa…

> Not really no, which is why we have the whole correlation != causation thing. The number of people who drowned in a swimming pool perfectly correlates with power generated by US nuclear plants over 10 years Not every encounter with a body of water results in drowning. But nearly every drowning involves a body of water. It's not about correlation. It's bayesian probability. P(drowning|water) >> P(drowning) P(lung ca…

> Do you get it yet?

Every example you listed is an intuitive correlation. You can address the causative relationship between these, but not with the data you provided. All you've done is list a bunch of correlations, and asserted a causative relationship based on shared implicit context. There may be one, but you have not demonstrated it.

Let's work an example without implicit context. I tell you:

P(A|B) >> P(A)

What have you learned about B->A? Literally nothing because the relationship between A and B could be any of:

- A causes B (direct causation);

- B causes A (reverse causation);

- A and B are both caused by C (common causation);

- A causes B and B causes A (bidirectional or cyclic causation);

- There is no connection between A and B; the correlation is a coincidence.

Re: U.S. Inflation Accelerates to 40-Year High

#229

Post by eldavido »

ask_b123 wrote: post #221
eldavido wrote: post #166

Earlier quoted context omitted.

The median net worth in the United States is approximately zero (assets less student loans, mortgage debt, etc). The median 401k balance in the US is something like 100k. I'm probably right of many people here politically but will readily admit, there's a lot less wealth out there than you'd think, and what there is, is held by a pretty small number of people. Also, speaking broadly, I don't think the economics profe…

Where did you get the data on median net worth? I found this, https://en.wikipedia.org/wiki/List_of_countries_by_wealth_pe... , which states that the median U.S. net worth per adult is 79,274. Following the references and links I ended up reading this: https://www.federalreserve.gov/publications/files/scf20.pdf , on the top of page 6 there is an interesting tidbit: > One liability of using the median as a descriptive…

I think that number was across the entire population, so includes children, etc. Probably came from either Piketty's Capital or something else (weekly reader of The Economist plus a lot of econ books)

Still, 79k for adults, inclusive of retirement accounts, home equity, etc. really isn't much.

Re: U.S. Inflation Accelerates to 40-Year High

#230

Post by hackeraccount »

bryanlarsen wrote: post #50

There are many competing theories for this inflation: 1. The increase in money supply. 2. Supply chain bottlenecks. 3. Corporate greed & tech monopolies. 4. Fundamental supply constraints. (mostly in the housing sector) Anybody trying to tell you that it's only or primarily one of them has a political motivation. It's all 4, with the first 2 being primary and both being important. To effectively solve inflation we ne…

But arguably one solution - slowing the increase in the money supply - will fix all 4 of them. This isn't like a fire that needs fuel and air to keep going and stopping it can be done by taking either away; One of the two items is technically trivial (raise interest rates) and politically unpopular to do - the other is politically popular and technically challenging (fix supply issues).

If history is any guide we'll try the politically easy one for 10 or 20 years before we finally get around to actually doing what will work.

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