[HN Gopher] Public Comment on Inflation Measurement
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Public Comment on Inflation Measurement
Author : reedjosh
Score : 26 points
Date : 2021-09-08 21:26 UTC (1 hours ago)
(HTM) web link (www.shadowstats.com)
(TXT) w3m dump (www.shadowstats.com)
| jjgreen wrote:
| Modern calculations of inflation use the geometric mean of price
| increases, while previously it was the arithmetic mean. The
| reason is exactly the geometric-arithmetic mean inequality [1].
| This is the largest theft ever made, and no-one knows or wants to
| know about it.
|
| [1]
| https://en.wikipedia.org/wiki/Inequality_of_arithmetic_and_g...
| sebmellen wrote:
| > Your PHP installation appears to be missing the MySQL which is
| required for WordPress.
|
| What a brave and stunning public comment!
| only_as_i_fall wrote:
| If the goal of cpi is to reflect what consumers feel the
| inflation rate is regardless of what any consistent measurement
| scheme says, the BLS could get rid of the pesky measurement
| nonsense altogether just take an annual survey. Think of the cost
| savings!
| tacostakohashi wrote:
| This website's subscription price has been unchanged at $175/year
| or $89/six months since (at least) 2008.
|
| http://www.shadowstats.com/subscriptions
|
| https://web.archive.org/web/20080512223437/http://www.shadow...
| iamdamian wrote:
| Yes, any inflation measure is imperfect, but I'm not sure how it
| could even theoretically be perfect given changing technology.
| How do you properly measure substitution effects that the iPhone
| has had relative to everything it imperfectly replaced; or the
| way services have replaced ownership in some areas of life? Given
| the complexity involved, the current measure seems to do the job
| well enough.
|
| As a side note, this mistrust of the CPI is something Eric
| Weinstein loves to bring up, too, with the same narrative about
| CPI being designed by politicians. After watching him try to
| convince economists [0] of the points made in this article (and
| avoiding questions that get specific or complex), I'm unconvinced
| I need to care.
|
| [0]: https://www.youtube.com/watch?v=h5gnATQMtPg
| nostrademons wrote:
| Is there a relevant time point in that presentation? It looks
| like the bulk of it is about inflation as in cosmology &
| physics, not economics.
| iamdamian wrote:
| Here's a good place to start:
| https://www.youtube.com/watch?v=h5gnATQMtPg&t=16m28s
|
| The video is a tad confusing. He has this idea that methods
| from physics and calculus should be ported over to economics
| to tackle unsolved problems like inflation, and he doesn't
| clearly delineate the two when speaking.
|
| Notably, the economists in the room point out that the
| theoretical problems he mentions have been tackled and do
| incorporate calculus. However, they say the resulting theory
| (e.g., the Divisia index) can't be practically applied at
| scale.
|
| (That said, while I don't think his point has landed or
| solved for anything new, I don't discount the value of
| translating tools across disciplines if it leads to results.)
| hartator wrote:
| There is also the old debate between monetary inflation and price
| inflation. Monetary inflation being the fact of just printing
| money and used to be what you refer to in economics books when
| you just say "inflation".
| SkyMarshal wrote:
| Yes that term does seem to get commingled with different
| meanings. Increasing money supply vs increasing prices seem to
| be the main ones.
|
| The former usually results in the latter, but not always, and
| sometimes with lag. And sometimes prices can rise without an
| increase in the money supply, for other reasons - a decrease in
| supply, an increase in demand due to some other factor than
| monetary inflation, etc.
|
| And that's not to mention the different measurements of money -
| M0, M1, etc. - as subsets of monetary inflation.
|
| I wish economists and journalists would better differentiate by
| using "monetary inflation", "price inflation", and/or other
| qualifiers for exactly which one they're talking about.
| ultrablack wrote:
| Certainly inflation measures doesn't appear to take housing cost
| into account.
| [deleted]
| [deleted]
| nemo44x wrote:
| In some markets, sure. However if you look at median home
| prices from 1980 to today and factor in interest rates (which
| are much lower today) and median income then you see that homes
| are about the same as they were in terms of monthly payment.
| With the upside today that early in your mortgage more of your
| payment goes to principal.
|
| If interest rates were to go to 8% overnight, besides crashing
| the global economy you'd see home prices cut in half. Homes are
| priced at what people that want to live there are able to pay
| per month. As interest rates fall home prices rise. Like I said
| certain markets have outpaced but their median incomes have
| outpaced as well. This makes sense as the upper middle class
| has grown a lot the last 40 years to make up much more of the
| population by percentage (there's a lot more high paying
| professional jobs today) and people like to live among people
| of similar financial classes for obvious reasons.
| [deleted]
| jeffreyrogers wrote:
| There is a housing component to the CPI. It uses rents instead
| of home prices and makes some tradeoffs, but it seems fair to
| me overall. If you live in SF or NYC or similar cities it can
| seem that CPI underestimates inflation due to high rents/home
| price, but it is a national level metric, so that's somewhat
| expected.
| nabla9 wrote:
| House prices are considered asset prices, not consumer goods.
|
| Only shelter part of housing is in the CPI.
| hkt wrote:
| There's a lot to be said about how measurements of inflation
| could be improved, but this kind of blog is regrettably not one
| of the useful ones. It has been a known quantity for a long time
| - the wiki talk page is a good start:
|
| https://en.m.wikipedia.org/wiki/Talk:Shadowstats.com#Shadows...
|
| Also, RationalWiki:
|
| https://rationalwiki.org/wiki/Shadow_Government_Statistics
| notabanker wrote:
| I would like to read a point-by-point critique of Shadowstats
| but have yet to come across one. The wikis you've listed are
| more muckraking in nature than a technical rebuttal.
|
| A poorly done critique increases rather than diminishes the
| credibility of the target.
| tacostakohashi wrote:
| Try this:
|
| https://www.washingtonpost.com/news/wonk/wp/2014/07/17/the-i.
| ..
| mikeyouse wrote:
| Even more simply - Shadowstats consumer inflation
| calculator thinks we've had at least 7% inflation up until
| ~2010 and then 10+% since then.
| (http://www.shadowstats.com/imgs/sgs-
| cpi.gif?hl=ad&t=16286924...)
|
| What in your life costs 500%+ more than it did in 1995 for
| the same product? No need for in-depth debunking when it's
| self-evidently nonsense.
| nabla9 wrote:
| The article is misguided. Assumes conspiracy.
|
| - Studies on CPI indicate that CPI is overestimated, not
| underestimated.
|
| - It's known fact that inflation does not match the common
| experience. It's solely because people remember easier large
| price increases and can't weight them correctly.
|
| - There are other measures but they have even worse problems. For
| policy issues core CPI is better.
| jeffreyrogers wrote:
| I think this is generally right, and if "real" CPI was much
| higher than calculated you would see it eventually since the
| difference between real and calculated would be compounded over
| time.
|
| However, because CPI is done at the national level while people
| typically live in one area, it is possible that HN readers in
| SF or wherever experience higher inflation than the CPI
| calculates. Certainly their rents have gone up much more than
| someone's in Kansas City.
| nabla9 wrote:
| When you see news that say rent prices go trough roof, it
| usually means new leases. If new leases go up 10% and only 5%
| of renters sign a new lease, that's only 0.5% increase to
| rents.
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(page generated 2021-09-08 23:00 UTC)