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

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

#361

Post by trts »

voisin wrote: post #178
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.

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

maybe more like Bush. Clinton was the last president who oversaw a brief surplus in the federal budget and once said "the era of big government is over".

pretty wild to think that surplus was in part driven by the internet boom. now we have some kind of stock market boom while the federal deficit is 10% of total GDP and national debt is growing by a trillion dollars (a million times a million) every 100 days or so.

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

#362

Post by tzekid »

jlmorton wrote: post #300
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…

> McDonalds burgers were 15¢. Okay, it was the McDonald's hamburger that seems to have been $0.15 in 1963. That is $1.53 in CPI-inflated 2024 dollars. The cost today is $2.19. That's about a 0.6% difference in the compounding inflation rate over 61 years.

Isn't using compounding inflation rate on top of CPI-inflated dollars double counting? It looks and feels like 40+% to me and everybody else

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

#363

Post by woodruffw »

TeMPOraL wrote: post #275
thebigman433 wrote: post #206

Earlier quoted context omitted.

You cant seriously be comparing actual cited stats for household size to lyrics from a song that was popular?

Why not? Stats are numbers compiled for someone at some point. A song this popular is a snapshot into how people lived and perceived themselves back then. A measurement of sorts. A disagreement between the two is a good indicator that the stats are suspect, or not the right stats to be looking at

The parsimonious reason is that people write songs about comfort and large, happy families, not about AGIs and statistical households of 3.3 to 3.7 people with 1 to 1.44 breadwinners. Songs (and media) reflect cultural values, not cultural realities; see also rosy movies about the "good old days" of 1960s USA being not particularly representative of the period's racial and economic strife.

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

#364

Post by trts »

csomar wrote: post #286

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 bot…

CPI doesn't measure things like healthcare properly (17% of GDP) as those prices are not paid by consumers. the insurers get their cut straight out of your paycheck.

College either. Tuition is priced as is, but what about people who pay many multiples of the original tuition in interest expenses over the years? not counted in CPI. Tuition inflation for a person with the means to pay out of pocket is much lower than someone who finances their education.

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

#365

Post by thebigman433 »

TeMPOraL wrote: post #275
thebigman433 wrote: post #206

Earlier quoted context omitted.

You cant seriously be comparing actual cited stats for household size to lyrics from a song that was popular?

Why not? Stats are numbers compiled for someone at some point. A song this popular is a snapshot into how people lived and perceived themselves back then. A measurement of sorts. A disagreement between the two is a good indicator that the stats are suspect, or not the right stats to be looking at

Because people dont accurately represent their situations? This seems so silly. West Virginia has a huge culture of music singing about how its a state of coal miners, when in reality, there are less than 15k working in the coal mines, with a population of 1.75 million.

That does not indicate that there are secretly a lot more coal miners, it just indicates that people are clinging to and showing off an identity that they like and want to be represented by.

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

#366

Post by brnaftr361 »

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…

This is an interesting take and it got me thinking. The replacement rate in the US is not 4. In fact, I would imagine that 4 is probably unsustainable. I like to see money more as a chemical gradient a la chemotaxis, though more clever people than I call it a carrot. With inflation the carrot is being removed, perhaps even being used as a stick. A superfluity of resources without controls of some sort may well lead to runaway growth, and I presume with the relative expenses of everything that there is an unsustainable imbalance at the fundamental level excess demand for intrinsically limited supply.

Of course the inflation model is applicable outside of the purely monetary. The more people you have the larger the labor army, and with each number added to that the less valuable the individual becomes even in terms of highly specialized labor, because ostensibly this can essentially be predicted with a distribution and with the way people are commoditized in most positions and companies these day, excellence is neither expected, sought for, nor wanted. This is still within the realms of the economists wheelhouse.

I would argue there's a third inflation, social inflation, as well. And this essentially hinges on the same principal that the labor army does: more people, less individual value (“a single death is a tragedy, a million deaths are a statistic”). And I would posit that the decrements have been seriously exacerbated in this realm by social media, television, celebrity, and so forth. I would also point out that the civil rights movement and women's lib has also (rightly) had a profound effect on social orientation that has yet to fully manifest itself.

If I recall correctly many developed nations have declining "native" populations. I'm unsure of the causal factors, but I wouldn't be surprised if it was in some ways an instinctual aversion to these sorts scaling laws. If I'm not mistaken Dunbar's number is roughly adhered to in nature, so it makes sense that there is somewhat of a drive to limit pack/civilizations size.

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

#367

Post by esoterica »

rafaelero wrote: post #335
esoterica wrote: post #290

Earlier quoted context omitted.

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…

Computers got 99% cheaper, so by your analogy of only considering an arbitrary product, we have actually experienced deflation!

Are you seriously insisting that the average product has gone up in price by 850x since 1960 and that gasoline is a huge outlier that has appreciated much much less than everything else?

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

#368

Post by littlestymaar »

woodruffw wrote: post #39
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…

> Remember in 1963 only the man was working, and typically supported 4 kids, a wife and often parents in the home. This is a ridiculous exaggeration: the average US household was 3.7 people in the 1960s, not over 6[1]. There are good reasons to hold politicians to task for recent abnormally high inflation. But this comment is more of an atavistic fever dream of the past than an expression of those reasons. Edit: anot…

This, and also the myth that only the men used to work and provide for the needs of their family: while is was true in the growing middle class it wasn't the case in the popular class at all.

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

#369

Post by starfleet_bop »

mrep wrote: post #359
fireflash38 wrote: post #309

Earlier quoted context omitted.

I think people are asking the wrong questions when it comes to inflation. It's not which president is at fault... It's who is profiting from it? It's not the minimum wage worker. It's not the standard office worker. What class has shown absolutely insane growth in wealth and income in the face of what looks like crippling inflation?

Your standard office worker probably refinanced their mortgage at ~3% and is now laughing their way to the bank as their debt inflates away so they probably are profiting from it. I know I am. Your standard retiree on the other hand who holds a lot of bonds that got absolutely hammered by inflation and rising interest rates is not doing so well.

That only works if you’re income rises faster than inflation, otherwise the relative amount of debt either remains the same or even increases.

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

#370

Post by fnordpiglet »

This is why I think raising interest rates to deal with inflation rather than working on increasing supply / reducing supply bottlenecks is absurd. Making money cost more isn’t reducing inflation, it’s reducing supply’s ability to produce while reducing demands ability to finance by making everything more expensive. That’s a dumb way to treat supply scarcity relative to demand - which is what makes inflation happen. The other way is reduce interest rates further and invest heavily in infrastructure and production targeting areas of specific demand. You might see a short term spike in inflation as more money enters pocketbooks but you’ll also see a dramatic drop as supply floods the market in response.

The wild card is housing, but making it more expensive to finance construction or purchase, interest rate hikes don’t help that either. It just makes more homeless.

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