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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

#281

Post by bjornsing »

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…

> Today you have 2 people working 100 hours a week to support 1-2 additional people , while living in an apartment and living in a run down and crime infested neighborhood.

Is that really true, or is it more a feeling many Americans have? As a Swede it’s a bit hard to relate to.

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

#282

Post by imtringued »

sanp wrote: post #193
voisin wrote: post #178

Earlier quoted context omitted.

> There is no fiscal conservative left in America. Truer words have never been spoken. Fiscal conservatism died with Reagan.

Yes, Reagan the fiscal conservative who tripled the deficit and national debt: https://www.pbs.org/wgbh/commandingheights/shared/minitext/e...

Greek austerity imposed by Germans had resulted in the doubling of debt as percentage of GDP.

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

#283

Post by rayiner »

bongodongobob wrote: post #203
bugbuddy wrote: post #157

Earlier quoted context omitted.

According to our experience of the last 7 years, we should expect interest rate cuts, tax cuts, and more fiscal expansion either at the same time or in some sequence. Each of them will help solve our problem. There is no fiscal conservative left in America.

"Fiscal conservativism" is the equivalent of a household not purchasing any insurance, not going to the doctor or dentist, and saying "look how affordable everything is if we cut out all those stupid things? It's wasteful spending!" Then you get into a car accident, go to the hospital, lose your job, and cry about the inefficiency of the market because you now have a huge bill that you can't pay. It's short sighted a…

> True fiscal conservatism would be all about social safety nets and free education to grow the economy

Which is why Italy and France have such strong economies, right? What’s really standing in the way of economic growth is that the government isn’t paying for people to get free degrees in left wing studies.

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

#284

Post by imtringued »

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…

I don't know what to tell you, but buying a house from a previous owner at double or tripple the price is not a hidden tax.

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

#285

Post by bjornsing »

In Sweden we measure inflation both with and without interest rate changes. The latter measure is called KPIF (“konsumentprisindex med fast ränta” / “consumer price index with fixed interest rate”). The central bank inflation target of 2% is formally for this KPIF. As I understand it KPIF includes borrowing costs (e.g. car loans), but at a fixed fake / interest rate.

It sounds complicated, but I think this is actually the right approach.

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

#286

Post by csomar »

The CPI is kinda fine and should not include interest rates. The CPI is used to measure price inflation and not individual misery and should be left to do just that.

Wait, there is actually a misery index: https://en.wikipedia.org/wiki/Misery_index_(economics)

It would have been better to invest in such an index. Here is a simplified example: The US is made of two cities; NYC and midland. Inflation rate is 0% for both and misery is non-existent. midland now has no jobs. None. So people move to NYC and inflate prices there. Inflation in NYC is 20% while deflation in midland is 30%. The Fed works the numbers and says that overall inflation is around 2% for the whole country and so everything is fine.

The reality is that misery is sky high; people are being burnt by prices in NYC and can't find jobs/buyers in midland. They have to move at high personal costs or close their businesses in the midland. On the other hand, they struggle to make a living in the new NYC town.

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

#287

Post by [deleted] »

zeroonetwothree wrote: post #202
tonymet wrote: post #97

Earlier quoted context omitted.

95% of zips in 1963 were safe and livable. Now everyone is competing to live in 15% of zipcodes You address the supply side of the "housing crisis", what about demand?

This is absurd. Crime is far lower than it was in 1963.

[deleted]

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

#288

Post by flakeoil »

gumby wrote: post #164
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…

> Today Palo Alto, Menlo Park, and other super zips are exclusively [A slight exaggeration] $500k incomes and up. In the 1960 census records you will find these good neighborhoods occupied with plumbers, painters and other blue collar workers. This was unfortunately a deliberate consequence of the dot com boom, not something that happened in previous tech booms. Until around 2000 Palo Alto actually had a lower median…

It took off when they lowered the interest rates after the dot com crash. The issue was the too low for too long interest rates that drove the increase in home ownership (and rents).

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

#289

Post by cpursley »

vineyardmike wrote: post #177
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…

> houses are unquestionably more valuable today… They also have better insulation and construction, they’re all wired for electricity and plumbing, they all have advanced HVAC. Fancier kitchens with more plumbing, appliances and nicer materials. People have access to more furniture and fixtures and appliances to fill more home - no one needed laundry rooms before a washer/drier was invented. Few had garages. Don’t le…

The increase in housing prices are not at all proportional to these advancements in building techniques and materials.

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

#290

Post by esoterica »

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…

You are completely mathematically illiterate if you think that annual inflation is 3-5 times higher than the reported value. The average annual inflation since 1960 is 3.7%. If the real annual inflation were 3x that (11.1%) then we would have seen 85000% cumulative inflation since 1960. A gallon of gasoline cost $0.30 in 1960, so it would cost $250 in 2024 under 850x inflation. In reality a gallon of gas costs $3.60 today, which is not far off from the 10.5x inflation the CPI measures over that time frame (the same CPI you claim is massively understated).

You're running around this thread smugly declaring yourself too smart to fall for the government's lies while failing to spend a few seconds doing the trivial arithmetic that would disprove all of your deeply held beliefs. Which of your other political or economic beliefs will fall apart with a little bit of middle school math?

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