Economy GOP back to Inflation worries. "Hyperinflation" (Update: 2022 Inflation Highest in 40 Years)

[Prefect]

You mean high. It intentionally overshoots.

CPI is low intentionally to reduce social security payments and other things tied to it. They changed the calculation in the early 90s to some mystery meat thing to avoid tying it to actually physical expenses. Now things are swapped in and out and no one knows how CPI is calculated. Someone has a number they want and things a juggled around until they get it.

 

[Jack V Savage]

CPI is low intentionally to reduce social security payments and other things tied to it. They changed the calculation in the early 90s to some mystery meat thing to avoid tying it to actually physical expenses. Now things are swapped in and out and no one knows how CPI is calculated.

That's exactly backwards. SS benefits are always rising because the inflation measure is overstated. Not sure what you're on about. Here's the BLS:

https://www.bls.gov/cpi/additional-resources/historical-changes.htm

 

[Prefect]

That's exactly backwards. SS benefits are always rising because the inflation measure is overstated. Not sure what you're on about. Here's the BLS:

https://www.bls.gov/cpi/additional-resources/historical-changes.htm

No. For example, food and energy was stripped or reduced from CPI to "make it less volatile", which is code for we don't want wages to increase with rising food and energy prices.

 

[Jack V Savage]

No. For example, food and energy was stripped or reduced from CPI to "make it less volatile", which is code for we don't want wages to increase with rising food and energy prices.

No, you're just factually wrong here. CPI does include those things; core CPI doesn't. Both are recorded and reported, but the Fed rightly makes decisions based on core CPI.

 

[Jack V Savage]

I see the edit. What does "component of CPI" mean to you?

 

[Prefect]

No, you're just factually wrong here. CPI does include those things; core CPI doesn't. Both are recorded and reported, but the Fed rightly makes decisions based on core CPI.

Show me that CPI overshoots inflation. No one would be talking about inflation period if CPI was remotely accurate. At best, CPI is just some number that is used to determine what the lifestyle of the average citizen should be. It isn't a measure of inflation at all. If a bunch of goods become cheaper in the CPI calculation, CPI is lower and people get a lower raise.

 

[Jack V Savage]

Show me that CPI overshoots inflation. No one would be talking about inflation period if CPI was remotely accurate. At best, CPI is just some number that is used to determine what the lifestyle of the average citizen should be. It isn't a measure of inflation at all.

I don't know what you want me to show, but this is widely known. For one thing, it doesn't include new items until they become common, but the price of new items tends to rapidly drop between introduction to society and use in the index. For another, the CPI doesn't measure technological advances (so like new cars being superior to old ones isn't accounted for). Substitution effects also bias it upwards. Of course it's a measure of inflation, despite that flaw.

 

[Prefect]

I don't know what you want me to show, but this is widely known. For one thing, it doesn't include new items until they become common, but the price of new items tends to rapidly drop between introduction to society and use in the index. For another, the CPI doesn't measure technological advances (so like new cars being superior to old ones isn't accounted for). Substitution effects also bias it upwards. Of course it's a measure of inflation, despite that flaw.

You are hand waving when anyone can google "CPI vs Inflation" and see what you are claiming is not at all "well known" or that there is even a consensus that CPI overshoots. If actual inflation was like only 1%, no would be talking about inflation. Period.

 

[Jack V Savage]

You are hand waving when anyone can google "CPI vs Inflation" and see what you are claiming is not at all "well known" or that there is even a consensus that CPI overshoots.

Try it.

Google this: "does cpi overstate or understate inflation"

I don't know what you think "hand-waving" is. I'm just repeating widely known facts.

 

[Prefect]

Try it.

Google this: "does cpi overstate or understate inflation"

I don't know what you think "hand-waving" is. I'm just repeating widely known facts.

"Consumer inflation has been estimated since the 1700s by measuring price changes in a fixed-weight basket of goods. This method was seen as effectively measuring the cost of maintaining a constant standard of living. In the last 30 years, a growing gap has become obvious between government reporting of inflation, as measured by the consumer price index (CPI), and the perceptions of actual inflation held by the general public. Informal evidence and occasional surveys have indicated that the general public believes inflation is running well above official reporting, and that public perceptions tend to mirror the inflation experience that once was reflected in the government's formal CPI reporting. The government is able to understate inflation by using methodologies based on the concept of a "constant level of satisfaction" that evolved during the first half of the 20th century in academia."

https://seekingalpha.com/article/4086464-cpi-understates-inflation-and-skews-expectations

 

[Jack V Savage]

https://seekingalpha.com/article/4086464-cpi-understates-inflation-and-skews-expectations

How many serious pieces did you skip to find something by a random crank? If you look through the search, you see that I'm right, no? And I gave you a pretty straightforward explanation of the issues, which you haven't addressed. You also didn't acknowledge your huge error (about CPI excluding stuff it doesn't exclude).

 

[Prefect]

How many serious pieces did you skip to find something by a random crank? If you look through the search, you see that I'm right, no? And I gave you a pretty straightforward explanation of the issues, which you haven't addressed. You also didn't acknowledge your huge error (about CPI excluding stuff it doesn't exclude).

More hand waving and posting nothing to support your argument.

 

[Jack V Savage]

More hand waving and posting nothing to support your argument.

Huh? I posted stuff to support my argument. Then there I was noting that you skipped over it. Not even sure how you think your theory makes any sense (think through the implications of it).

 

[Prefect]

Huh? I posted stuff to support my argument. Then there I was noting that you skipped over it. Not even sure how you think your theory makes any sense (think through the implications of it).

Huh? Well I guess you never read my post or ever really read into the topic or talked with people on social security. Maybe, you should do that sometime and think of the implications of what would happen to social security , which is already being underfunded, if CPI ever overshot inflation.

 

[Jack V Savage]

Huh? Well I guess you never read my post or ever really read into the topic or talked with people on social security. Maybe, you should do that sometime and think of the implications of what would happen to social security , which is already being underfunded, if CPI ever overshot inflation.

I pointed this out: "For one thing, it doesn't include new items until they become common, but the price of new items tends to rapidly drop between introduction to society and use in the index. For another, the CPI doesn't measure technological advances (so like new cars being superior to old ones isn't accounted for). Substitution effects also bias it upwards." You didn't address it. You claimed that they changed the calculation of inflation in the '90s to some mystery thing, and you didn't say why that's supposed to be relevant, and I posted a link to all the times they've made changes with explanations. You said that food and energy were stripped or reduced from CPI, and I pointed out that that's false and that you were thinking of core CPI.

Among the implications of CPI overshooting inflation is slowing rising living standards for SS recipients, which is, in fact, what we see. Meanwhile, if you're saying that it's *under*stated (which would make no sense), one of the implications is that the economy is growing slower than it appears to be (or depending on the the size of the undershooting, it could be contracting--there was this conman who had something called "Shadowstats" that added 500 bps to CPI and said that was the "real" number; if that were true, it would basically mean that we've been in a large recession for decade, which is totally inconsistent with everything else we can observe).

 

[Prefect]

Among the implications of CPI overshooting inflation is slowing rising living standards for SS recipients, which is, in fact, what we see. .

Go read my post. If CPI was overshooting inflation, SS recipients and most people who's jobs tie their cost of living adjustments to CPI would see a rising standard of living. That isn't happening. The fact that you are arguing this is pretty evident that you never had your raises based on CPI.

 

[Jack V Savage]

Go read my post. If CPI was overshooting inflation, SS recipients and most people who's jobs tie their cost of living adjustments to CPI would see a rising standard of living. That isn't happening. The fact that you are arguing this is pretty evident that you never had your raises based on CPI.

No, it is happening. Not sure what numbers you're looking at.

 

[Prefect]

No, it is happening. Not sure what numbers you're looking at.

No, it is happening. I don't know what numbers you are looking at.

 

[Jack V Savage]

No, it is happening. I don't know what numbers you are looking at.

OK, so you're just trolling. To anyone seriously interested in the subject, I think the answers are pretty clear.

 

[woodguyatl]

There were plenty of fiscal conservatives and libertarians complaining about the spending. And a good chunk of the GOP was last year during the Covid spending bills, even as Trump in support of them. Are you really going to pretend like there weren't people in the GOP warning of inflation last year?

I don't remember a lot of Conservatives complaining about the Trump tax cuts that were supposed to create so much economic growth that they would pay for themselves. Did I miss the long speeches by Republican Senators and Representatives pointing out that the projected economic growth rates were absurd? In fact, I don't think that the growth rates even met projections for any calendar year after the cuts. The good news is that the corporate tax cuts are permanent but the tax rates on individuals are going to expire in a few years so we can start paying for tax cuts. To this day I don't understand how anybody voted for a bill with permanent corporate tax cuts and temporary individual tax cuts.