I found the “Price Changes” graph about 2/3 down the page really alarming.
Virtually all of the gains in the form of lowered prices are purely in discretionary consumption and subsistence goods. Cheap entertainment, toys, staple foods.
Meanwhile the insane price increases are in critical needs, medical care, housing, college education.
In my mind that graph is pretty strong evidence that there really is massive inflation and the idea of “asset inflation” does exist, contrary to the author’s lead point that it should be seen as normal growth of value.
For most people, if you show them this data and said, “see, low inflation, don’t worry...” they are rightfully going to be pissed off. “Low inflation” except in everything that really matters for health, home ownership and betterment for my children.
I guess I should just thank the monetary policy overlords for my cheap Netflix while we all die of cancer under the thumb of landlords and all our economic participation from labor dwindles and continues to lose purchasing power for what we most need.
This is just it ; The author doesn't compare to CPI as calculated using the methodologies for the 1990s or the 1980s - he just builds a straw man and throws cheap consumer electronics at it. What he fails to realize, is that this is precisely the argument of those who believe real inflation to be higher than reported; Namely, that without including cheap electronics and luxury items the picture is much much worse - which it is. This article built a nice strawman and burnt it - what I'd like to see is the author actually tackle the claims of his opponents rather than gross mischaracterizations of them.
This was a point I made when the pandemic shortages kicked off. The entire world's purchasing habits shifted towards guns, food, prepping gear, and TP. The prices of those items skyrocketed (when they could be found). I predicted at the time that, even though everyone was experiencing massive price inflation in the stuff we were actually buying, largely due to increased demand, it was not going to show up in the numbers because of the way inflation is calculated.
Put another way, if I'm in the market for housing, healthcare, groceries and gardening supplies, and the prices of all those things around skyrocketing, then it doesn't matter much to me if the price of cars is down 20% since the crisis began. The inflation measures, however, don't account for the shifts in purchasing demand, which should weight the measure heavily.
This is true. There's another even more interesting question related to the effects lockdowns etc had on the economy I think. How do you even measure inflation with your old basket when some of it becomes unavailable anywhere (some services) and for other parts half of the venues where they were sold (non essential retail outlets) are now shut?
My conclusion is that statistics about what happened to the economy during 2020 (ie the month to month path) are likely to be very unreliable. This might have implications for policymaking in future which I don't think have really been explored anywhere.
The price elasticity of higher education is 0, and healthcare is also very low. We see my more inflation in things that we're not willing to go without.
Virtually all of the gains in the form of lowered prices are purely in discretionary consumption and subsistence goods. Cheap entertainment, toys, staple foods.
Meanwhile the insane price increases are in critical needs, medical care, housing, college education.
In my mind that graph is pretty strong evidence that there really is massive inflation and the idea of “asset inflation” does exist, contrary to the author’s lead point that it should be seen as normal growth of value.
For most people, if you show them this data and said, “see, low inflation, don’t worry...” they are rightfully going to be pissed off. “Low inflation” except in everything that really matters for health, home ownership and betterment for my children.
I guess I should just thank the monetary policy overlords for my cheap Netflix while we all die of cancer under the thumb of landlords and all our economic participation from labor dwindles and continues to lose purchasing power for what we most need.