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USD Purchasing Power in Real Time Since 2000

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Re: USD Purchasing Power in Real Time Since 2000

#31

Post by selcuka »

JumpCrisscross wrote: post #24
0xbadcafebee wrote: post #15

The real time number isn't as interesting as the potential future number. If the dollar stops being the reserve currency, the purchasing power of the dollar will crash. No more cheap borrowing, no more low interest rates, hello constant high inflation. The Iran war has made that increasingly likely to happen. It may even have been intentional. https://www.jpmorgan.com/insights/global-research/currencies... | https://…

> If the dollar stops being the reserve currency, the purchasing power of the dollar will crash This is far from clear.

The Federal Reserve's Real Broad Dollar Index (RTWEXBGS) is 113.51 as of February. Not saying it would crash losing all of that 13.51 excess overnight, but it's still overvalued against foreign currencies.

Re: USD Purchasing Power in Real Time Since 2000

#32

Post by gritspants »

selcuka wrote: post #31
JumpCrisscross wrote: post #24

Earlier quoted context omitted.

> If the dollar stops being the reserve currency, the purchasing power of the dollar will crash This is far from clear.

The Federal Reserve's Real Broad Dollar Index (RTWEXBGS) is 113.51 as of February. Not saying it would crash losing all of that 13.51 excess overnight, but it's still overvalued against foreign currencies.

Is this not what the current US administration seeks? You can't simultaneously be the reserve currency and hope to be a net exporter at the same time.

Re: USD Purchasing Power in Real Time Since 2000

#33

Post by koolba »

sanex wrote: post #30

I question the accuracy. In 2010 I could buy a McDonald's double cheeseburger for $1. Now they're like $3 and they took off a slice of cheese.

Double cheeseburger has always had and still has two slices of cheese. The McDouble (which used to be $1) always had a single slice of cheese.

The real hack was asking them to put Big Mac sauce on the McDouble. For $.30 it was pretty damn close at 1/3 the price.

Re: USD Purchasing Power in Real Time Since 2000

#34

Post by Avicebron »

JumpCrisscross wrote: post #23
Avicebron wrote: post #21

Earlier quoted context omitted.

Measurements like this obfuscate other costs that aren't well tracked. Healthcare and housing being two big ones.

> Healthcare and housing being two big ones Almost all BLS price indices, including CPI, include housing. (CPI measures the “rent of primary residence, owners' equivalent rent, utilities, bedroom furniture” [1].) That said, this is the second time I've come across this myth on HN in less than a week. Where did you hear that price indices don't track healthcare and housing costs? [1] https://www.bls.gov/opub/hom/cpi/c…

The point isn't that CPI excludes healthcare and housing, CPI shelter sub-index https://fred.stlouisfed.org/series/CUSR0000SAH1 and the medical care sub-index https://fred.stlouisfed.org/series/CUSR0000SAM2 have grown ~500% and ~770% respectively in the same time frame. The _overall_ CPI they are blended into grew ~300%, which means real wages are deflated. So if personal spending is weighted towards healthcare and housing (anyone who rents or pays a mortgage below a certain income) then your purchasing power is declining faster than the real wage would suggest.

EDIT: saying real wages is deflated is ambiguous, the headline CPI understates the effective inflation experienced by people whose spending consumption is weighted towards housing and healthcare. So the "real wage" is inflated relative to the lived experience of those people.

Re: USD Purchasing Power in Real Time Since 2000

#35

Post by bobthepanda »

JumpCrisscross wrote: post #16
nrclark wrote: post #9

This isn't very surprising. Typical US economic policy aims for 2-3% annual inflation. That counter shows an average 2.6% inflation across 26 years, which is kind of right in the range we'd expect. It's debatable whether this is good longterm policy - but it's been the norm in the US for decades.

> Typical US economic policy aims for 2-3% annual inflation. That counter shows an average 2.6% inflation across 26 years, which is kind of right in the range we'd expect We aim for "inflation of 2 percent over the longer run, as measured by the annual change in the price index for personal consumption expenditures" [1]. [1] https://www.federalreserve.gov/faqs/economy_14400.htm

Accurately aiming inflation as a central bank is like trying to keep a deflating balloon the same size using a harmonica. 2.6% isn’t bad, I don’t know that many if any central banks have managed a tighter band.

Re: USD Purchasing Power in Real Time Since 2000

#36

Post by JumpCrisscross »

selcuka wrote: post #31
JumpCrisscross wrote: post #24

Earlier quoted context omitted.

> If the dollar stops being the reserve currency, the purchasing power of the dollar will crash This is far from clear.

The Federal Reserve's Real Broad Dollar Index (RTWEXBGS) is 113.51 as of February. Not saying it would crash losing all of that 13.51 excess overnight, but it's still overvalued against foreign currencies.

> it's still overvalued against foreign currencies

That would make imports more expensive and exports more competitive. Some pain, given we run a deficit [1]. But $50bn/month adustment in a $30tn economy is 2%. Not fun. But not a "crash."

(There is a genuine argument to be made that American voters have been rejecting dollar hegemony across multiple elections for a couple of decades.)

[1] https://www.bea.gov/data/intl-trade-investment/international...

Re: USD Purchasing Power in Real Time Since 2000

#37

Post by rayiner »

0xbadcafebee wrote: post #15

The real time number isn't as interesting as the potential future number. If the dollar stops being the reserve currency, the purchasing power of the dollar will crash. No more cheap borrowing, no more low interest rates, hello constant high inflation. The Iran war has made that increasingly likely to happen. It may even have been intentional. https://www.jpmorgan.com/insights/global-research/currencies... | https://…

> No more cheap borrowing, no more low interest rates, hello constant high inflation.

Do you mean that we’ll have high inflation because we’ll keep running massive deficits? Because many countries that don’t have the reserve currency also have low inflation.

Re: USD Purchasing Power in Real Time Since 2000

#38

Post by oniony »

downboots wrote: post #17
nrclark wrote: post #9

This isn't very surprising. Typical US economic policy aims for 2-3% annual inflation. That counter shows an average 2.6% inflation across 26 years, which is kind of right in the range we'd expect. It's debatable whether this is good longterm policy - but it's been the norm in the US for decades.

It also says nothing of where that dollar has been in 20 years

Probably down the back of a sofa.

Re: USD Purchasing Power in Real Time Since 2000

#39

Post by orwin »

rayiner wrote: post #37
0xbadcafebee wrote: post #15

The real time number isn't as interesting as the potential future number. If the dollar stops being the reserve currency, the purchasing power of the dollar will crash. No more cheap borrowing, no more low interest rates, hello constant high inflation. The Iran war has made that increasingly likely to happen. It may even have been intentional. https://www.jpmorgan.com/insights/global-research/currencies... | https://…

> No more cheap borrowing, no more low interest rates, hello constant high inflation. Do you mean that we’ll have high inflation because we’ll keep running massive deficits? Because many countries that don’t have the reserve currency also have low inflation.

I think some people think that high velocity is deflationary. So if suddenly dollars are not traded as much, it slow down the dollar velocity and this has a global inflationnary effect. This isn't a bad theory tbh, i believe at least half of it (money velocity decreasing have an inflationary effect on assets, productive or not)

Re: USD Purchasing Power in Real Time Since 2000

#40

Post by vikingerik »

nrclark wrote: post #9

This isn't very surprising. Typical US economic policy aims for 2-3% annual inflation. That counter shows an average 2.6% inflation across 26 years, which is kind of right in the range we'd expect. It's debatable whether this is good longterm policy - but it's been the norm in the US for decades.

This ticker's current speed is faster than that, though. It's going about 1e-9 dollar per second. That comes to about $0.03 per year, which as a fraction of the current base of $0.50, comes to 6% inflation per year.

I don't know how that speed was determined. Either it's using a linear decrease since 2000 (which isn't correct, the inverse of exponential inflation would be logarithmic decay, not linear), or it's weighting by recency for the high inflation since 2020 (which may continue, or may not.)

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