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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

#61

Post by JumpCrisscross »

Avicebron wrote: post #57
JumpCrisscross wrote: post #50

Earlier quoted context omitted.

> 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 If you spend a third of your income on housing and 8% on healthcare [1], then those components–assuming your 5x and 7.7x multiples–will raise your cost of living by 2.25x. That leaves 1.75x for the other components (to get to the overall 3x). That sounds reasonable…

> Well, yes. There are regional CPIs and income-indexed CPIs and all manners of privately-calculated costs of living. Great. So we agree, you are just dismissing the distributional analysis and equating fungible goods with inelastic ones. You can't substitute away from something like region-locked housing supply so those folks face higher effective inflation (BLS R-CPI-I).[1] [1] https://www.minneapolisfed.org/articl…

> you are just dismissing the distributional analysis and equating fungible goods with inelastic ones

No, I'm not. You're the one moving goalposts.

The thread started by someone claiming, wrongly, that housing and healthcare aren't included in CPI. (A common myth.) I showed that was wrong. You said it's underweighted. I pushed back. You're now saying it's underweighted for some people, which, like, is how distributions work.

Variance doesn't make a central tendency meaningless. And the truth is for most Americans, real wages are up. Lived experience and all. It's painfully not for a section of Americans in housing markets locked by policy from expansion or in bad health and luck. That's unfortunate and deserves attention. But it doesn't negate the whole.

> You can't substitute away from something like region-locked housing supply so those folks face higher effective inflation

Straw man. Nobody claimed universality.

If we were having a discussion about the Midwest, I'd quote different numbers and reach a different conclusion. That's how scoping works. Americans, as a whole, have experienced real wage growth since 2000. That doesn't mean literally every single American has. And it doesn't mean that people outside America have.

Re: USD Purchasing Power in Real Time Since 2000

#62

Post by slg »

JumpCrisscross wrote: post #53
slg wrote: post #51

Earlier quoted context omitted.

And by "real wages" you mean "Employed full time: Median usual weekly real earnings: Wage and salary workers: 16 years and over". You chose a number that specifically factored out the negatives like dropping participation rate[1] and underemployment (couldn't find the isolated number for underemployment in 30 seconds of googling, so here's one that's tempered by including unemployment too)[2]. It also glosses over th…

> by "real wages" you mean "Employed full time: Median usual weekly real earnings: Wage and salary workers: 16 years and over" Yes. > You chose a number that specifically factored out the negatives like dropping participation rate[1] and underemployment I chose a consistent dataset. One of many. (Dropping participation rate is affected by stuff like demographics in addition to underemployment.) If you have a credible…

>If you have a credible source that shows declining real wages since 2000, I'd love to see it.

My original comment was about growing inequality and my second comment was describing why the metric you cited and median real wages in general don't address that issue. So no, I will not be looking for a better real wages metric, because it is not the appropriate measure to capture inequality. You can find plenty of numbers and charts on that problem here[1].

[1] - https://en.wikipedia.org/wiki/Income_inequality_in_the_Unite...

Re: USD Purchasing Power in Real Time Since 2000

#63

Post by JumpCrisscross »

engineer_22 wrote: post #59
gritspants wrote: post #32

Earlier quoted context omitted.

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.

Perpetual trade deficit is modern system of tribute.

> Perpetual trade deficit is modern system of tribute

Probably not. Equatorial Guinea, Palau and Kyrgyzstan run the largest current-account deficits as fractions of GDP [1]. (Current account counts goods and services.)

[1] https://en.wikipedia.org/wiki/List_of_countries_by_current_a...

Re: USD Purchasing Power in Real Time Since 2000

#64

Post by JumpCrisscross »

slg wrote: post #62
JumpCrisscross wrote: post #53

Earlier quoted context omitted.

> by "real wages" you mean "Employed full time: Median usual weekly real earnings: Wage and salary workers: 16 years and over" Yes. > You chose a number that specifically factored out the negatives like dropping participation rate[1] and underemployment I chose a consistent dataset. One of many. (Dropping participation rate is affected by stuff like demographics in addition to underemployment.) If you have a credible…

>If you have a credible source that shows declining real wages since 2000, I'd love to see it. My original comment was about growing inequality and my second comment was describing why the metric you cited and median real wages in general don't address that issue. So no, I will not be looking for a better real wages metric, because it is not the appropriate measure to capture inequality. You can find plenty of number…

> So no, I will not be looking for a better real wages metric, because it is not the appropriate measure to capture inequality

Got it, your complaints about real wages were entirely a non sequitur.

Re: USD Purchasing Power in Real Time Since 2000

#65

Post by slg »

JumpCrisscross wrote: post #64
slg wrote: post #62

Earlier quoted context omitted.

>If you have a credible source that shows declining real wages since 2000, I'd love to see it. My original comment was about growing inequality and my second comment was describing why the metric you cited and median real wages in general don't address that issue. So no, I will not be looking for a better real wages metric, because it is not the appropriate measure to capture inequality. You can find plenty of number…

> So no, I will not be looking for a better real wages metric, because it is not the appropriate measure to capture inequality Got it, your complaints about real wages were entirely a non sequitur .

This is legitimately one of the strangest responses I have ever gotten on HN. You brought real wages into the conversation. My complaints weren't a non sequitur, they were a direct response to you. Now you're criticizing me for engaging with what you said? I guess I should have refused to engage from the start, but you know the proverb about the second best time to plant a tree, so I'm done with this conversation.

Re: USD Purchasing Power in Real Time Since 2000

#66

Post by JumpCrisscross »

slg wrote: post #65
JumpCrisscross wrote: post #64

Earlier quoted context omitted.

> So no, I will not be looking for a better real wages metric, because it is not the appropriate measure to capture inequality Got it, your complaints about real wages were entirely a non sequitur .

This is legitimately one of the strangest responses I have ever gotten on HN. You brought real wages into the conversation. My complaints weren't a non sequitur, they were a direct response to you. Now you're criticizing me for engaging with what you said? I guess I should have refused to engage from the start, but you know the proverb about the second best time to plant a tree, so I'm done with this conversation.

I guess I didn't see the inequality focus in your first comment. At least, not beyond the qualitative assets as cash and sundries vs assets as financial assets. I pointed out that real wages are up in response to your claim about people being paid dollars. (The dollars we're paid are worth more. They're individually less. But the total take home is more. Hence real wage.) I think it's a non sequitur to then turn around and say well I was actually arguing about inequality from the start.

Re: USD Purchasing Power in Real Time Since 2000

#67

Post by dlcarrier »

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.

It's not the deficit itself, it's the quantitative easing that is used to pay for most of the deficit. If the US dollar weren't a reserve currency, printing more money would have a much larger inflationary impact.

Re: USD Purchasing Power in Real Time Since 2000

#69

Post by 0xbadcafebee »

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.

It would cause inflation, which would lower purchasing power of imports; It would raise interest rates, which would raise the cost of loans and debt for individuals; and it would make the Government getting loans much harder, leading to spending cuts and higher taxes. All of these things will come together to weaken the dollar, thus making it have less purchase power. Whether it's a crash or slow bleeding out doesn't make a difference in the end.

Re: USD Purchasing Power in Real Time Since 2000

#70

Post by 0xbadcafebee »

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.

It means high inflation because if we're not the reserve currency, global markets sell their dollars, which leaves more dollars unused, which makes them plentiful, which makes them less valuable. This has a knock-on effect; it makes import goods more expensive, it makes government borrowing more expensive (which raises costs for citizens), and loss of petrodollar (the main reason for us being the reserve currency) makes oil more expensive. To pay for our debt, after we no longer have all this investment (other nations buying our dollars, t-bills), we print more money. So our currency is less valuable, and everything for us becomes more expensive, thus, inflation.
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