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US Consumer Price Index up 4.2%

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Re: US Consumer Price Index up 4.2%

#241

Post by win311fwg »

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.

If the first 1x covers all your spending, what else are you going do with the other 1x? Invest it in even more investments to produce more income that you already cannot spend? That turns into what is essentially working for free. Why bother?

Re: US Consumer Price Index up 4.2%

#242

Post by vinyl7 »

casey2 wrote: post #230
bachmeier wrote: post #213

Earlier quoted context omitted.

> This actually makes 0 sense. Like, do you even understand what you're saying? It makes perfect sense if the decision to work is based on real, after-tax income. Change the comment to say "the tax rate keeps climbing so I quit working" and it would not occur to anyone to challenge it. Once you have enough saved to generate income covering the very basics (probably somewhere around $30k/year in a LCOL area in the US)…

If you don't understand second-order effect that is. What happens when everyone stops working, either QoL falls or prices rise. Labor force rate is at 83.8% for prime age workers. (Most of the QoL add comes from immigrant labor while most of the QoL extraction comes from high tech. So this does complicate the math) The govenment then lacking revenue extracts more from prime age workers and raises the retirement age a…

I saw this coming from a mile away. Jobs just don't pay enough anymore, especially with inflation eating away at money faster than pay raises and housing becoming unaffordable for the majority. It's barely worth it to work. But that is what US capitalism has optimized for. Prioritizing the rich capital owners over the proletariat with tax cuts, regulation cuts, not enforcing monopoly laws, spending money on wars and bailing out the large companies etc.

Re: US Consumer Price Index up 4.2%

#243

Post by jhallenworld »

JumpCrisscross wrote: post #216
jhallenworld wrote: post #96

Earlier quoted context omitted.

No it's cooked. For high tech items, they assume that improved technology means you are getting more for your money even if the price goes up, so they discount it. It's true that you get more for your money, but it ignores threshold effects, like you just can't buy an equivalent phone for $10 even if todays phone's are 200x better. Then there's the "owner's equivalent rent" BS and this is 25% of CPI. It answers the q…

> it assumes rental price and housing costs are somehow linked when in reality asset prices have far outstripped rent It's pricing the cost of shelter. Renting a home is buying shelther. Buying a home is buying shelter and buying a financial asset. OER is the way you separate the last two components. Otherwise, you'd have to only look at rents to determine housing prices, which would be rubbish in a country where mos…

Suppose you want shelter. It used to be that you could buy a house for a reasonable price and move in. But now that's unaffordable, so instead your have to pay rent. In CPI thinking these are equivalent forms of shelter, but I bet if you asked most Americans, they would not agree with you.

Re: US Consumer Price Index up 4.2%

#244

Post by jr3592 »

fluoridation wrote: post #240
jr3592 wrote: post #229

Earlier quoted context omitted.

> Inflation does incentivize spending, yes. All inflation incentivizes is finding an asset class that isn't devaluing. If that is what you mean by "spending" then we align. But does inflation incentivize spending money on depreciating assets? Only for fools.

??? "All" it incentivizes? Uh, no. The vast majority of people don't treat their salaries as an investment opportunity, they have to live off it. If you need to fix your water heater, you might get it fixed now while inflation is high than wait until winter (not a great example given the time scales involved, but it gets the point across). Even if you have nothing that you desperately need, if inflation is really hig…

???

OBVIOUSLY if you absolutely HAVE to spend money because your life depends on it (ex: hot water) then you're going to be incentivized to spend it sooner rather than later in an inflationary market.

I'm referring to discretionary spending. Eating out. Buying a new laptop. Traveling. Etc.

This statement: "it pushes people to get rid of currency by any means they have available." is just flat out wrong. If you're draining your bank accounts on discretionary purchases right now, that's your mistake.

I would include retiring before you absolutely have to as "discretionary". Now is not the time to make a decision like that, when the alternative is a smarter financial decision (work, save, invest in assets that aren't devaluing at the same rate as currency).

Re: US Consumer Price Index up 4.2%

#245

Post by autoexec »

fluoridation wrote: post #221
autoexec wrote: post #124

Earlier quoted context omitted.

> A rationale for the price rarely affects my choice. This would make you the exception. Companies are constantly increasing prices to see how much they can charge consumers before they feel cheated and stop buying and/or enough customers get priced out to hurt profits. Consumers tend to feel ripped off if they think a price increase was due to greed but are way more forgiving if they think the price increase was nee…

You're treating what the consumer believes and what is the case as if they were synonymous. How able is a consumer on the street to judge whether a price increase is legitimate or arbitrary? "Feeling ripped off" sounds more like a post hoc rationalization that's applied when a price is pushed just past the threshold.

"Feeling ripped off" is the immediate reaction to sticker shock. It takes active messaging from companies to get ahead of that reaction and plant in the mind of the consumer a justification that they'll think is fair. Companies have gotten very good about pushing their narrative to the public via social media, news, and even retail signage. Some companies have just outright lied about the reasons behind their price hikes or about how much they were actually impacted by real events, so what consumers are tricked into believing isn't always the truth.

Consumers typically have an idea of what something is worth though, usually based on previous prices. This isn't a problem when prices increase slowly because for every old person who thinks "What a scam! This used to cost 65 cents and now they want $1!" there is a child who never knew any better and for them the cost was always around $1. When prices increase too much or too quickly however that's when people get upset and assume greed unless they are primed to accept it with some excuse. This is especially true when consumers are struggling with high prices while hearing that the companies raising prices, switching to lower quality ingredients, or charging more while giving less are also making record-breaking profits.

Re: US Consumer Price Index up 4.2%

#246

Post by JumpCrisscross »

jhallenworld wrote: post #243
JumpCrisscross wrote: post #216

Earlier quoted context omitted.

> it assumes rental price and housing costs are somehow linked when in reality asset prices have far outstripped rent It's pricing the cost of shelter. Renting a home is buying shelther. Buying a home is buying shelter and buying a financial asset. OER is the way you separate the last two components. Otherwise, you'd have to only look at rents to determine housing prices, which would be rubbish in a country where mos…

Suppose you want shelter. It used to be that you could buy a house for a reasonable price and move in. But now that's unaffordable, so instead your have to pay rent. In CPI thinking these are equivalent forms of shelter, but I bet if you asked most Americans, they would not agree with you.

> But now that's unaffordable

Which flows through to owner-equivalent rent, in part.

> In CPI thinking these are equivalent forms of shelter, but I bet if you asked most Americans, they would not agree with you

It really doesn't. When measuring rent, you directly measure rent. For OER, you're measuring the housing price and imputing shelter cost from that. They're similar, but different. Sort of like how renting and owning are similar, but different.

Also, given the variance in housing affordability across the country, you'd almost certainly have to strip out any financial-asset component anyway to meaningfully compare the resulting number.

Re: US Consumer Price Index up 4.2%

#247

Post by jbmchuck »

jr3592 wrote: post #187
jbmchuck wrote: post #165

Earlier quoted context omitted.

I have the same feelings as the original poster as I get further into middle age and have a good retirement nest egg - for me there are things more valuable - free time and the things I want to do with it but can't get paid to do - than making more income than I really need.

How much do you have saved?

Enough that a 5% annual return is enough for me to get by. I'm certainly not done working - I want to get that to 3% or so - but it does make it a bit demotivating some days when I look outside and imagine the other things I could be doing with my time.

Re: US Consumer Price Index up 4.2%

#248

Post by BobaFloutist »

jazzpush2 wrote: post #109
JumpCrisscross wrote: post #84

Earlier quoted context omitted.

Because people can’t internalize regional variance. So since the beginning of time, it’s not noticed when the national number is higher and fraud when it’s lower.

Ah, you're right. A broad, contrarian dismissal is exactly the way you should respond in any conversation related to CPI/inflation. By the way, that coffee is $9. Sorry, Brazil tariffs and everything else - you understand.

I think a broad, contrarian dismissal of a broad, contrarian dismissal of a metric is, while unhelpful, not inappropriate.

Re: US Consumer Price Index up 4.2%

#249

Post by mitthrowaway2 »

NewJazz wrote: post #179
mrtksn wrote: post #35

Earlier quoted context omitted.

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!.

And hopefully the other candidates applying for the position have similar inflation expectations to your own!

Re: US Consumer Price Index up 4.2%

#250

Post by VirusNewbie »

twoodfin wrote: post #226
sokoloff wrote: post #90

Earlier quoted context omitted.

In most cases, you are granted a notional dollar amount that is immediately turned into a concrete and fixed number of shares that then vest over the next 4 years. Then, any share price appreciation on the shares is captured by you at vesting, rather than being paid in cash (the value of which has been inflated away) and then purchasing shares/index that has risen in the last 1-4 years. If you are paid in cash, you w…

Right, but cash compensation could be structured the same way, minus whatever would be settled on for the retention value to the employer of the vesting schedule. I get your point. The value of stock isn’t that it’s stock per se, but rather that it’s inflation-resistant even when illiquid.

It's optionality that only has an upside financially, while the downside is just having to do more interviews.

Let's say you're worth 300k on the open market as a senior software engineer. If you get a job that pays 200k a year + 400k in stock over four years, you're making ~300k.

Except if after the first year, the stock goes up 30%, you're making 330k the second year + whatever cash raise you get. Then if it goes up another 10%, and so on... etc.

If, however the stock falls after the first year, presumably you can go out and find another 300k a year job at a different company.

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